1 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 [x] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12 [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a- 6(e)(2)) Roto-Rooter, Inc. ......................................................................... (Name of Registrant as Specified in its Charter) Roto-Rooter, Inc. ......................................................................... (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: .................................................................... 2) Aggregate number of securities to which transaction applies: ..................................................................... 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-ll_/ ..................................................................... 4) Proposed maximum aggregate value of transaction: ..................................................................... 5) Total fee paid: ________________ _/ Set forth the amount on which the filing fee is calculated and state how it was determined. [ ] Fee previously paid with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ..................................................................... 2) Form, Schedule or Registration Statement No.: ..................................................................... 3) Filing Party: ..................................................................... 4) Date Filed: ..................................................................... 2 ROTO-ROOTER, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS MAY 20, 1996 The Annual Meeting of Stockholders of Roto-Rooter, Inc. will be held at The Phoenix Club, 812 Race Street, Cincinnati, Ohio, on Monday, May 20, 1996 at 11:30 a.m. for the following purposes: (1) To elect directors; (2) To ratify the selection by the Board of Directors of independent accountants; and (3) To transact such other business as may properly be brought before the meeting. Stockholders of record at the close of business on March 25, 1996 are entitled to notice of, and to vote at, the meeting. IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED AT YOUR EARLIEST CONVENIENCE.NO POSTAGE IS REQUIRED IF IT IS MAILED IN THE UNITED STATES. Naomi C. Dallob Secretary April 8, 1996 3 ROTO-ROOTER, INC. PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Roto-Rooter, Inc. (hereinafter called the "Company") of proxies to be used at the Annual Meeting of Stockholders ("Annual Meeting") of the Company to be held on May 20, 1996 and any adjournments thereof. The Company's mailing address is 2500 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio 45202.The approximate date on which this Proxy Statement and the enclosed proxy are being sent to stockholders is April 8, 1996.Each valid proxy received in time will be voted at the meeting and, if a choice is specified on the proxy, the shares represented thereby will be voted accordingly.The proxy may be revoked by the stockholder at any time before the Annual Meeting by providing notice to the Secretary. Only stockholders of record as of the close of business on March 25, 1996 will be entitled to vote at the Annual Meeting or any adjournments thereof.On such date, the Company had outstanding 5,151,660 shares of common stock, par value $1 per share ("Common Stock"), entitled to one vote per share. ELECTION OF DIRECTORS Nineteen directors are to be elected at the Annual Meeting to serve until the following annual meeting of stockholders and until their successors are duly elected and qualified.Set forth below are the names of the persons to be nominated by the Board of Directors, together with a description of each person's principal occupation during the past five years and other pertinent information.The Company has a program under which three nominations for membership on the Board of Directors are rotated each year among senior officers of the Company, senior executives of its operating divisions and subsidiaries and senior executives of Chemed Corporation, a Delaware corporation and the majority (58 percent) owner of the Company's outstanding Common Stock ("Chemed").The persons considered to be in the rotating group are Ms. Naomi C. Dallob and Messrs. Richard L. Arquilla, Brian A. Brumm, Gary C. Burger, Spencer S. Lee, and Timothy S. O'Toole. Ms. Dallob and Messrs. Brumm and O'Toole are being nominated from the group this year.It is anticipated that additional executives of Chemed and the Company will be included in this rotating group in future years. Unless authority is withheld or names are stricken, it is intended that the shares covered by each proxy will be voted for the nominees listed.Votes that are withheld will be excluded entirely from the vote and will have no effect.The Company anticipates that all nominees listed in this Proxy Statement will be candidates when the election is held.However, if for any reason any nominee is not a candidate at that time, proxies will be voted for any substitute nominee designated by the Board of Directors (except where a proxy withholds authority with respect to the election of directors).The affirmative vote of a plurality of the votes cast will be necessary to elect each of the nominees for director. NOMINEES EDWARD L. HUTTON Mr. Hutton is Chairman of the Company and, from 1970 to November 1993, Director since 1984 has served as President, Chief Executive Officer, and a director of Age: 76 Chemed, Cincinnati, Ohio (a diversified public corporation with interests in residential and commercial plumbing and sewer and drain cleaning services; janitorial supply products and services; medical and dental supply distribution for private practice; and home health care services).Since November 1993, Mr. Hutton has served as Chairman and Chief Executive Officer of Chemed.He is Chairman and a director of Omnicare, Inc., Cincinnati, Ohio (health care products and services) ("Omnicare"), a public corporation in which Chemed holds a 2.8 percent ownership interest.He is also Chairman and a director of National Sanitary Supply Company, Cincinnati, Ohio (janitorial supplies) ("National"), a public corporation in which Chemed holds an 84 percent ownership interest.Mr. Hutton is the father of Thomas C. Hutton, a director of the Company. 1 4 WILLIAM R. GRIFFIN Mr. Griffin is President and Chief Executive Officer of the Company Director since 1984 and has held these positions since May 1985.Mr. Griffin is also an Age: 52 Executive Vice President of Chemed and has held this position since May 1991.Mr. Griffin is a director of Barefoot, Inc., Globe Business Resources, and Chemed. BRIAN A. BRUMM Mr. Brumm is a Vice President, Treasurer and the Chief Financial Director since 1985 Officer of the Company and has held these positions since Age: 41 August 1984. JAMES A. CUNNINGHAM Mr. Cunningham is a Senior Chemical Adviser with Schroder Director since 1990 Wertheim & Co. Incorporated, New York, New York (an investment Age: 51 banking, asset management and securities firm) and has held this position since March 1992.Previously, he was a Managing Director of Furman Selz Incorporated, New York, New York (an institutional investment company), and held this position from October 1990 to March 1992. Mr. Cunningham is a director of Chemed and National. NAOMI C. DALLOB Ms. Dallob is Secretary and General Counsel of the Company and has Director since 1992 held these positions since August 1994.Previously, from September Age: 42 1984, she was Assistant Secretary of the Company.Ms. Dallob is also a Vice President and the Secretary of Chemed and has held these positions since February 1987 and August 1994, respectively.She is a director of National. CHARLES H. ERHART, JR. Mr. Erhart retired as President of W. R. Grace & Co., Boca Raton, Director since 1985 Florida (international specialty chemicals and health care) ("Grace"), Age: 70 in August 1990, having previously held this position since July 1989. Previously, he was Chairman of the Executive Committee of Grace and held that position from November 1986 to July 1989.He is a director of Chemed, National and Omnicare. NEAL GILLIATT Mr. Gilliatt is President of Neal Gilliatt/Stuart Watson, Inc., New York, Director since 1985 New York (management consulting), and has held this position since Age: 78 April 1982.On April 1, 1982 he retired as Chairman of the Executive Committee of the Interpublic Group of Companies, Inc., New York, New York (advertising and related communications), having held that position since February 1980. Mr. Gilliatt is a director of Consolidated Products, Inc. and National. LAWRENCE J. GILLIS Mr. Gillis is a Vice President of the Company and has held this Director from April 1985 position since May 1992.Mr. Gillis is also President and Chief to May 1986 and May 1989 Operating Officer of Roto-Rooter Services Company and has held to May 1990 and since these positions since October 1994.Previously, he was Senior Vice May 1991 President-Operations of Roto-Rooter Services Company, from Age: 61 February 1991 to October 1994.From November 1983 to February 1991, he was a Regional Vice President of Roto-Rooter Services Company. DOUGLAS B. HARPER Mr. Harper is the Executive Vice President of the Company and has Director since 1984 held this position since May 1992.Previously, from May 1984 to May Age: 52 1992, he was a Vice President of the Company.Since October 1980, he has also served as President of Roto-Rooter Corporation, a subsidiary of the Company. 2 5 WILL J. HOEKMAN Mr. Hoekman is an Executive Vice President of Firstar Bank, Director since 1985 Des Moines, Iowa, and has held this position since May, 1995. Age: 50 Previously, he held the position of Senior Vice President since November 1980. Mr. Hoekman is a director of National. THOMAS C. HUTTON Mr. Hutton is a Vice President of Chemed and has held this position Director since 1985 since February 1988. Mr. Hutton is a director of Chemed, National and Age: 45 Omnicare. He is a son of Edward L. Hutton, Chairman and a director of the Company. PATRICK L. JOHNSON Mr. Johnson is a Vice President of the Company and President and Director since 1984 Chief Executive Officer of Service America Systems, Inc., a subsidiary Age: 42 of the Company ("Service America"), and has held these positions since December 1983 and August 1991, respectively. From August 1991 to April 1993, he was Vice Chairman and Chief Executive Officer of Service America. He also served as a Senior Vice President of Roto-Rooter Services Company from September 1986 to September 1993. SANDRA E. LANEY Ms. Laney is Senior Vice President and the Chief Administrative Director since 1985 Officer of Chemed and has held these positions since November 1993 Age: 52 and May 1991, respectively. Previously, from May 1984 to November 1993, she was a Vice President of Chemed. Ms. Laney is a director of Chemed, National and Omnicare. KEVIN J. MCNAMARA Mr. McNamara is Vice Chairman of the Company and has held this Director since 1986 position since August 1994.Previously, he served as Secretary and Age: 42 General Counsel of the Company from August 1986 to August 1994. He is also President of Chemed and has held this position since August 1994.Previously, November 1993 to August 1994, he held the position of Executive Vice President of Chemed, and, from May 1992 to November 1993, he held the position of Vice Chairman of Chemed and, from August 1986 to May 1992, held the position of Vice President of Chemed. He also held the positions of General Counsel and Secretary of Chemed from August 1986 to August 1994.He is a director of Chemed, National and Omnicare. JOHN M. MOUNT Mr. Mount is a Principal of Lynch-Mount Associates, Cincinnati, Ohio Previously a director (management consulting), and has held this position since from August 1987 to November 1993.From April 1991 to November 1993, Mr. Mount was April 1991 Senior Vice President of Diversey Corporation, Detroit, Michigan Age: 54 (specialty chemicals) ("Diversey") and President of Diversey's DuBois Industrial Division.Previously, from May 1989 to April 1991, Mr. Mount was an Executive Vice President of Chemed and President of DuBois Chemicals, Inc., then a 100 percent-owned subsidiary of Chemed ("DuBois"). He held the latter position from September 1986 to April 1991. He is a director of Chemed and Omnicare. TIMOTHY S. O'TOOLE Mr. O'Toole is an Executive Vice President and the Treasurer Director since 1991 of Chemed and has held these positions since May 1992. He is Age: 40 also the Chairman and Chief Executive Officer of Patient Care, Inc., a 100 percent-owned subsidiary of Chemed. Previously, from February 1989 to May 1992, he held the positions of Vice President and Treasurer of Chemed. He is a director of Chemed, Vitas Healthcare Corporation, National and Omnicare. 3 6 DONALD E. SAUNDERS Mr. Saunders is President of Diversey's DuBois Division and has held Not previously a director this position since November 1993. From April 1991 to October 1993, Age: 52 he was Executive Vice President of Diversey and, from January 1991 to March 1991, he was Executive Vice President of DuBois. D. WALTER ROBBINS, JR. Mr. Robbins retired as Vice Chairman of Grace in January 1987 and Director since 1985 thereafter became a consultant to Grace until July 1995.He is a Age: 76 director of Chemed, National and Omnicare. GEORGE J. WALSH III Mr. Walsh is a partner with the law firm of Gould & Wilkie, New York, Not previously a director New York, and has held this position since January 1978.He is a Age: 50 director of Chemed. COMPENSATION OF DIRECTORS Throughout 1995 each member of the Board of Directors who was not a regular employee of the Company or of a wholly owned subsidiary of the Company was entitled to be paid directors' fees.Accordingly, executives of Chemed who are directors of the Company (other than Mr. E. L. Hutton who is the Company's Chairman) are entitled to receive directors' fees for attending Board and Committee meetings.Each member of the Board of Directors of the Company was paid $1,000 for his attendance at each meeting of the Board and $550 for each meeting of a Committee he attended.The chairman of each Committee was paid $600.Effective February 7, 1996, the directors' fees were increased and each member of the Board of Directors who is not a regular employee of the Company or of a wholly owned subsidiary of the Company (other than Mr. E. L. Hutton) is now paid $1,075 for his attendance at each meeting of the Board and $600 for each meeting of a Committee of the Board he attended.The Chairman of each Committee is paid $675.The following directors who are members of the Incentive Committee of either the Company or an affiliated company also receive an additional annual fee of $4,700:Messrs. Cunningham, Erhart, Gilliatt, Hoekman and Robbins.Messrs. Hoekman and Schnee received $29,800 and $28,600, respectively, for serving on a special committee which considered Chemed's offer to acquire the shares of the Company's Common Stock it did not already own.Members of the Board of Directors are reimbursed for reasonable travel expenses incurred in connection with such meetings. On May 15, 1995, each member of the Board of Directors (other than those serving on the Incentive Committee of either the Company or an affiliated company) was granted an unrestricted stock award covering 75 shares of the Company's Common Stock under the Company's 1993 Stock Incentive Plan.Those directors who are members of the Incentive Committee of either the Company or an affiliated company were paid the cash equivalent of the 75 share stock award or $2,050. COMMITTEES AND MEETINGS OF THE BOARD The Company has the following Committees of the Board of Directors: Audit Committee; Compensation Committee; and Incentive Committee.It does not have a nominating committee of the Board of Directors. The Audit Committee (a) recommends to the Board of Directors a firm of independent accountants to audit the Company and its consolidated subsidiaries, (b) reviews and reports to the Board of Directors on the Company's annual financial statements and the independent accountants' report on such financial statements and (c) meets with the Company's senior financial officers, internal auditors and independent accountants to review audit plans and work and other matters regarding the Company's accounting, financial reporting and internal control systems.The Audit Committee consists of Messrs. Gilliatt, Hoekman, McNamara and Robbins.The Audit Committee met on two occasions in 1995. The Compensation Committee makes recommendations to the Board of Directors concerning (a) salary and incentive compensation payable to officers and certain other key employees of the Company, (b) establishment of incentive compensation plans and programs generally and (c) adoption and administration of certain employee benefit plans and programs.The Compensation Committee consists of Messrs. Erhart, Gilliatt, and T. C. Hutton and Ms. Laney.During 1995, the Compensation Committee met on four occasions. 4 7 The Incentive Committee administers the Company's 1984, 1987, 1990, 1993 and 1995 Stock Incentive Plans. In addition, the Incentive Committee makes (a) grants of stock options and stock awards to key employees of the Company and (b) recommendations to the Board of Directors concerning additional year-end contributions by the Company under the Company's Retirement and Savings Plan.The Incentive Committee consists of Messrs. Hoekman, Erhart, and Cunningham. The Incentive Committee met on one occasion during 1995. During 1995, there were five meetings of the Board of Directors.Each incumbent director attended at least 75 percent of the aggregate of (a) the total number of meetings held by the Board of Directors and (b) the total number of meetings held by all Committees of the Board of Directors on which he served which were held during the period for which he was a director or member of any such Committee. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Ms. Laney is the Chief Administrative Officer and Senior Vice President of Chemed and Mr. T. C. Hutton is a Vice President of Chemed.Both are directors of Chemed, of which Mr. Griffin is also an Executive Vice President and a director.See "Certain Arrangements and Transactions-Transactions with Chemed" on page 14. EXECUTIVE COMPENSATION JOINT REPORT OF THE COMPENSATION COMMITTEE AND INCENTIVE COMMITTEE ON EXECUTIVE COMPENSATION The Company believes that executive compensation must align executive officers' interests with those of the Company's stockholders and that such are best served by having compensation directly and materially linked to financial and operating performance criteria which when successfully achieved will enhance stockholder value. The Company attempts to achieve this objective with an executive compensation package for its senior executives which combines base salary, annual cash incentive compensation, long-term incentive compensation in the form of stock options and restricted stock awards along with various benefit plans, including pension plans, savings plans and medical benefits generally available to the employees of the Company. The executive compensation program is administered through the coordinated efforts of the Compensation Committee and the Incentive Committee of the Board of Directors.The membership of both committees is comprised of outside directors (i.e. non-employees of the Company), although the Compensation Committee includes two officers of Chemed (see "Compensation Committee Interlocks and Insider Participation" above). The Compensation Committee is responsible for the review, approval and recommendation to the Board of Directors of matters concerning base salary and annual cash incentive compensation for key executives of the Company.The recommendations of the Compensation Committee on such matters must be approved by the full Board of Directors.The Incentive Committee administers the Company's stock incentive plans under which it reviews and approves grants of stock options and restricted stock awards.Both the Compensation and Incentive Committees may use their discretion to set executive compensation where, in their collective judgement, external, internal or individual circumstances warrant. Following is a discussion of the components of the executive officer compensation program. In determining base salary levels, the Compensation Committee takes into account the magnitude of responsibility of the position, individual experience and performance and specific issues particular to the Company.In general, base salaries are set at levels believed by this Compensation Committee to be sufficient to attract and retain qualified executives when considered with the other components of the Company's compensation structure. 5 8 The Compensation Committee believes that a significant portion of total cash compensation should be linked to annual performance criteria.Consequently, the purpose of annual incentive compensation for senior executives and key managers is to provide a direct financial incentive in the form of an annual cash bonus to these executives to achieve their business unit's and the Company's annual goals.Operational and financial goals are established at the beginning of each fiscal year and generally take into account such measures of performance as sales and earnings growth, profitability, cash flow and return on investment.Other non-financial measures of performance relate to organizational development, product or service expansion and strategic positioning of the Company's assets. Individual performance is also taken into account in determining individual bonuses.It is the Company's belief that bonuses as a percent of a senior executive's salary should be sufficiently high to provide a major incentive for achieving annual performance targets.Bonuses for senior executives of the Company generally range from 25-50 percent of base salary. The stock option and restricted stock award program forms the basis of the Company's long-term incentive plans for executive officers and key managers.The objective of these plans is to align executive and long-term stockholder interests by creating a strong and direct link between executive pay and stockholder return. Stock options and restricted stock awards generally are granted annually and are generally regarded as the primary incentive for long-term performance as they are granted at fair market value and have vesting restrictions which generally lapse over three or four year periods.The Committee considers each grantee's current option and award holdings in making grants.Both the amounts of restricted stock awards and proportion of stock options increase as a function of higher salary and position of responsibility within the Company. The Compensation and Incentive Committees have considered, and are continuing to review, the qualifying compensation regulations issued by the Internal Revenue Service in December 1993.As compensation for any individual is not currently expected to exceed the $1 million base, the Company is not presently affected by these regulations. The base salary of Mr. Griffin, the President and Chief Executive Officer of the Company, was increased at an annualized rate of 6.5 percent in 1995 to a base rate of $310,000.His cash bonus in respect of 1995 services was $154,000, which represented an increase of $20,000 over 1994 and 50 percent of his base salary.Restricted stock awards were granted to Mr. Griffin in respect of 1995 services having a value of $115,000.Factors considered in establishing the compensation levels in 1995 for Mr. Griffin included Company sales growth of 4.5 percent and, excluding expenses related to Chemed's offer to acquire the shares of the minority stockholders, net income growth of 14.4 percent.The Compensation Committee and the Incentive Committee believe that Mr. Griffin's base salary, the increases in his cash bonus and the restricted stock awards granted to Mr. Griffin in respect of 1995 services are consistent with his performance as measured by these factors and the criteria discussed above. Compensation Committee Incentive Committee --------------------- ----------------- C. H. Erhart, Jr. J. A. Cunningham N. Gilliatt C. H. Erhart, Jr. T. C. Hutton W. J. Hoekman S. E. Laney 6 9 SUMMARY COMPENSATION TABLE The following table shows the compensation paid to the Chief Executive Officer and the four most highly compensated executive officers of the Company for the past three years for all services rendered in all capacities to the Company and its subsidiaries: - --------------------------------------------------------------------------------------------------------------------------- SUMMARY COMPENSATION TABLE - --------------------------------------------------------------------------------------------------------------------------- Long Term Compensation Annual Compensation Awards - --------------------------------------------------------------------------------------------------------------------------- Securities Securities Underlying Name Roto-Rooter Underlying Service All and Restricted Roto-Rooter America Other Principal Stock Stock Stock Compen- Position Year Salary ($) Bonus ($) Awards ($) (1) Options (#) Options (#) sation ($) - --------------------------------------------------------------------------------------------------------------------------- W. R. Griffin 1995 $298,917 $154,000 $115,000 -0- -0- $127,084 (2) President 1994 276,417 134,000 100,000 10,000 -0- 68,340 and CEO 1993 260,000 121,000 120,000 31,500 10,000 81,784 D. B. Harper 1995 188,180 86,000 60,000 -0- -0- 65,305 (3) Executive 1994 180,514 75,500 53,000 5,000 -0- 39,284 Vice President 1993 174,737 71,000 50,000 15,000 -0- 47,816 L. J. Gillis 1995 182,833 72,600 80,000 -0- -0- 53,776 (4) Vice President 1994 172,217 60,500 69,000 5,000 -0- 37,601 1993 164,000 52,500 60,000 17,000 -0- 45,423 P. L. Johnson 1995 162,422 17,800 20,000 -0- -0- 37,097 (5) Vice President 1994 157,058 27,800 25,000 4,000 -0- 44,168 1993 149,400 48,000 50,000 15,000 13,000 40,554 B. A. Brumm 1995 114,000 47,400 45,000 -0- -0- 41,199 (6) Vice President, 1994 107,698 41,200 40,000 4,000 -0- 27,754 Treasurer and 1993 102,750 37,200 40,000 14,000 4,000 30,113 Chief Financial Officer - --------------------------------------------------------------------------------------------------------------------------- <FN> (1) The number and value of aggregate restricted stock holdings in Roto-Rooter Common Stock at December 31, 1995 were as follows:W. R. Griffin--6,707 shares, $219,654; D.B. Harper--3,252 shares, $106,503; L.J. Gillis--4,120 shares, $134,930; P.L. Johnson--2,121 shares, $69,463; and B. A. Brumm--2,505 shares, $82,039.Dividends are paid to holders of restricted stock who are entitled to vote these shares, whether or not vested.Restricted stock awards vest evenly over three-year periods.Restricted stock awards were granted in February 1994, February 1995 and February 1996, as incentive compensation earned in 1993, 1994 and 1995, respectively. (2) Includes a $16,767 contribution to the Company's Retirement and Savings Plan ("Savings Plan"), a $81,900 contribution to the Company's Deferred Compensation Plan, a $2,339 premium payment under the Company's Executive Salary Protection Plan ("ESP"), a $2,335 premium payment for term life insurance, and $23,743, which is the value of premium payments made by the Company for the benefit of Mr. Griffin under a split dollar life insurance policy, which provides for the refund of premiums to the Company upon termination of the policy ("Split Dollar Policy"). (3) Includes a $15,069 contribution to the Savings Plan, a $33,536 contribution to the Deferred Compensation Plan, a $1,829 premium payment for term life insurance, and $14,871, which is the value of premium payments for a Split Dollar Policy. (4) Includes a $14,396 contribution to the Savings Plan, a $38,038 contribution to the Deferred Compensation Plan, and a $1,342 premium payment for term life insurance. (5) Includes a $3,234 contribution to the Service America Retirement and Savings Plan, a $24,469 contribution to the Service America Deferred Compensation Plan, a $430 premium payment for term life insurance, and $8,964, which is the value of premium payments for a Split Dollar Policy. (6) Includes a $13,451 contribution to the Savings Plan, a $20,552 contribution to the Deferred Compensation Plan, a $927 premium payment for term life insurance, and $6,269, which is the value of premium payments for a Split Dollar Policy. 7 10 The following table summarizes Roto-Rooter stock option exercises during 1995 and the year-end number and value of unexercised stock options held by the executive officers named in the Summary Compensation Table. Aggregated Roto-Rooter Stock Option Exercises in 1995 and Roto-Rooter Stock Option Values as of December 31, 1995 - --------------------------------------------------------------------------------------------------------------------------- Value of Unexercised In-the-Money Shares Number of Unexercised Options Acquired Options at 12/31/95 (#) at 12/31/95 ($) On Value ------------------------------------------------------ Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable - --------------------------------------------------------------------------------------------------------------------------- W. R. Griffin 25,500 $391,975 18,250 23,250 $146,200 $174,950 D. B. Harper -0- -0- 39,750 11,250 531,426 84,662 L. J. Gillis 22,125 295,635 -0- 12,250 -0- 92,162 P. L. Johnson 16,300 251,480 10,000 10,500 92,099 80,349 B. A. Brumm 9,700 169,400 8,000 10,000 65,100 76,600 The table below shows information concerning the year-end number and value of unexercised Service America stock options held by the executive officers named in the Summary Compensation Table. SERVICE AMERICA STOCK OPTION VALUES AS OF DECEMBER 31, 1995 Value of Unexercised Number of Unexercised In-the-Money Options Options at 12/31/95 (#) at 12/31/95 ($) --------------------------------- --------------------------------- Name (1) Exercisable Unexercisable Exercisable Unexercisable - ------------------------------------------------------------------------------------------------------------------------ W. R. Griffin 17,000 8,000 $ -0- $ -0- D. B. Harper -0- -0- -0- -0- L. J. Gillis -0- -0- -0- -0- P. L. Johnson 32,600 10,400 -0- -0- B.A. Brumm 4,300 3,200 -0- -0- - --------------------------------------------------------------------------------------------------------------------------- <FN> (1) None of the named executive officers exercised Service America stock options during 1995. - --------------------------------------------------------------------------------------------------------------------------- EMPLOYMENT AGREEMENTS The Company has entered into employment agreements with Messrs. Griffin, Harper, Gillis, Johnson and Brumm.Mr. Griffin's employment agreement provides for his continued employment as an executive employee of the Company through October 31, 2000, subject to earlier termination under certain circumstances, at a base salary of $310,000 per annum or such higher amounts as the Board of Directors may determine as well as participation in incentive compensation plans, stock incentive plans and other employee benefit plans.In the event of termination without cause or a material reduction in authority or responsibility, the agreement provides that Mr. Griffin will receive severance payments equal to 150 percent of his then current base salary plus the amount of incentive compensation most recently paid or approved in respect of the previous year, and the fair market value of all stock awards which have vested during the twelve months prior to termination, for the balance of the term of the agreement.Messrs. Harper, Gillis, Johnson and Brumm have employment agreements which provide for their continued employment as executive employees of the Company through October 31, 2000, November 6, 1998, October 31, 1998 and October 31, 1998, respectively, and are identical in all material respects to that of Mr. Griffin, except their respective agreements provide for a base salary of $193,700, $191,000, $165,500 and $118,200 per annum or such higher amounts as the Board of Directors may determine. 8 11 COMPARATIVE STOCK PERFORMANCE The graph below compares the yearly percentage change in the Company's cumulative total stockholder return on the Common Stock (as measured by dividing (i) the sum of (A) the cumulative amount of dividends for the period December 31, 1990 to December 31, 1995, assuming dividend reinvestment, and (B) the difference between the Company's share price at December 31, 1990 and December 31, 1995; by (ii) the share price at December 31, 1990) with (1) the cumulative total return, assuming reinvestment of dividends, of the NASDAQ Stock Index and (2) the cumulative total return, assuming reinvestment of dividends, of the group of companies set forth in the footnote to the graph. ROTO-ROOTER, INC. Total Cumulative Stockholder Return for Five-Year Period Ending December 31, 1995 Roto-Rooter 100.00 101.50 141.68 180.73 135.50 206.29 - -------------------------------------------------------------------------------- NASDAQ (US) 100.00 160.56 186.87 214.51 209.69 296.30 - -------------------------------------------------------------------------------- Peer Group 100.00 114.27 119.38 127.63 140.05 165.90 (1) Since the Company does not believe that it can reasonably identify a peer group on an industry or line of industry basis, for purposes of comparison, the Company has selected the following companies which have similar market capitalizations: Amplicon Inc., Chittenden Corp., Ecology and Environment Inc.--Class A, Groundwater Technology Inc., Instron Corp., Knape & Vogt Manufacturing Co., MacDermid Inc., Quaker Chemical Corp., and Tech-Sym Corp. 9 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information with respect to the only persons who are known to be the beneficial owners of more than 5 percent of the Common Stock of the Company: Name and Address Amount and Nature Percent of Beneficial of Beneficial of Title of Class Owner Ownership (1) Class (4) - --------------------------------------------------------------------------------------------------------------------------- Common Stock Chemed Corporation 2,990,333 shares; 56.5% Par Value 2600 Chemed Center Direct (2) $1 Per Share Cincinnati, Ohio Common Stock State Farm Mutual 463,066 shares; 8.7% Par Value Automobile Insurance Direct and through $1 Per Share Company affliliated entities (3) One State Farm Plaza Bloomington, Illinois - --------------------------------------------------------------------------------------------------------------------------- Footnotes: (1) As reported to the Securities and Exchange Commission by the beneficial owners. (2) Sole voting power, 2,990,333 shares; sole dispositive power, 2,990,333 shares. (3) Sole voting power, 463,066 shares; sole dispositive power, 463,066 shares. (4) For purposes of calculating Percent of Class, all shares subject to stock options which were exercisable within 60 days from December 31, 1995 were assumed to have been issued. 10 13 The following table sets forth information as of December 31, 1995 with respect to the Capital Stock of Chemed and the Common Stock of the Company beneficially owned by all nominees and directors of the Company, each of the named executive officers in the Summary Compensation Table, and the Company's directors and executive officers as a group: Amount and Nature Percent of Beneficial of Name Title of Class Ownership (1) Class (2) - --------------------------------------------------------------------------------------------------------------------------- E. L. Hutton Chemed Capital Stock 42,321 Direct 36,750 Option 3,967 Trustee Roto-Rooter Common Stock 35,089 Direct 12,500 Option 7,372 Trustee W. R. Griffin Chemed Capital Stock 2,628 Direct 7,500 Option Roto-Rooter Common Stock 22,536 Direct 18,250 Option B. A. Brumm Chemed Capital Stock None Roto-Rooter Common Stock 14,274 Direct 8,000 Option J. A. Cunningham Chemed Capital Stock 1,000 Direct 500 Trustee Roto-Rooter Common Stock 1,000 Direct N. C. Dallob Chemed Capital Stock 6,846 Direct 750 Option Roto-Rooter Common Stock 764 Direct 250 Option C. H. Erhart, Jr. Chemed Capital Stock 1,500 Direct Roto-Rooter Common Stock 6,666 Direct N. Gilliatt Chemed Capital Stock 3,400 Direct Roto-Rooter Common Stock 6,666 Direct L. J. Gillis Chemed Capital Stock None Roto-Rooter Common Stock 15,252 Direct 11 14 Amount and Nature Percent of Beneficial of Name Title of Class Ownership (1) Class (2) - --------------------------------------------------------------------------------------------------------------------------- D. B. Harper Chemed Capital Stock 100 Direct Roto-Rooter Common Stock 11,919 Direct 39,750 Option W. J. Hoekman Chemed Capital Stock 109,110 Trustee (3) 1.1% Roto-Rooter Common Stock 73,700 Trustee (3) 1.4% T. C. Hutton Chemed Capital Stock 16,607 Direct 1,750 Option 4,467 Trustee (4) Roto-Rooter Common Stock 4,724 Direct 250 Option 7,372 Trustee P. L. Johnson Chemed Capital Stock None Roto-Rooter Common Stock 11,693 Direct 10,000 Option S. E. Laney Chemed Capital Stock 23,319 Direct 31,000 Option Trustee (4) Roto-Rooter Common Stock 2,461 Direct 250 Option K. J. McNamara Chemed Capital Stock 12,611 Direct 7,500 Option Trustee (4) Roto-Rooter Common Stock 1,405 Direct 250 Option J. M. Mount Chemed Capital Stock 7,520 Direct Roto-Rooter Common Stock 1,000 Direct T. S. O'Toole Chemed Capital Stock 12,450 Direct 5,250 Option Roto-Rooter Common Stock 1,759 Direct 1,750 Option D. W. Robbins, Jr. Chemed Capital Stock 2,000 Direct Roto-Rooter Common Stock 1,000 Direct D. E. Saunders Chemed Capital Stock 1720 Direct Roto-Rooter Common Stock None 12 15 Amount and Nature Percent of Beneficial of Name Title of Class Ownership (1) Class (2) - --------------------------------------------------------------------------------------------------------------------------- J. E. Schnee Chemed Capital Stock None Roto-Rooter Common Stock 325 Direct G. J. Walsh III Chemed Capital Stock 1,000 Direct Roto-Rooter Common Stock None Directors and Executive Chemed Capital Stock 126,502 Direct 1.2% Officers as a Group 113,577 Trustee (5) 1.1% (20 persons) 90,875 Option Roto-Rooter Common Stock 137,533 Direct 2.6% 81,072 Trustee (5) 1.5% 91,250 Option 1.7% - --------------------------------------------------------------------------------------------------------------------------- FOOTNOTES TO STOCK OWNERSHIP TABLE (1) Includes securities beneficially owned (a) by the named persons or group members, their spouses and their minor children (including shares of Chemed Capital Stock and Roto-Rooter Common Stock allocated as at December 31, 1995 to the account of each named person or member of the group under the Company's Retirement and Savings Plan, Chemed's Savings and Investment Plan, and Chemed's Employee Stock Ownership Plan), (b) by trusts and custodianships for their benefit and (c) by trusts and other entities as to which the named person or group has or shares the power to direct voting or investment of securities."Direct" refers to securities in categories (a) and (b) and "Trustee" to securities in category (c).Where securities would fall into both "Direct" and "Trustee" classifications, they are included under "Trustee" only."Option" refers to shares which the named person or group has a right to acquire within 60 days from December 31, 1995.For purposes of determining the Percent of Class, all shares subject to stock options which were exercisable within 60 days from December 31, 1995 were assumed to have been issued. (2) Percent of Class under 1.0 percent is not shown. (3) Comprises shares with respect to which Mr. Hoekman shares the power to direct the voting as a member of a bank trust committee. (4) Messrs. T. Hutton, McNamara and Ms. Laney are trustees of the Chemed Foundation which holds 57,971 shares of Chemed's Capital Stock over which the trustees share both voting and investment power.This number is included in the total number of "Trustee" shares held by the Directors and Executive Officers as a Group but is not reflected in the respective holdings of the individual trustees. (5) Shares over which more than one individual holds beneficial ownership have only been counted once in calculating the aggregate number of shares owned by Directors and Executive Officers as a Group. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the regulations thereunder, the Company's officers and directors and persons who own more than ten percent of the Company's Common Stock are required to file reports with respect to their ownership and changes in ownership of the Company's Common Stock with the Securities and Exchange Commission ("SEC").In addition, such persons are required to forward copies of such reports to the Company.Based on a review of the copies of such reports furnished to the Company and on the written representation of those persons who have not furnished such reports that with respect to 1995 no reports on Form 5 were required to be filed with the SEC, the Company believes that during the period January 1, 1995 through December 31, 1995, except for Mr. Gillis, the Company's officers and directors and greater than 10 percent stockholders have complied with all Section 16(a) reporting requirements.Mr. Gillis belatedly reported on Form 4s an award of restricted stock, the exercise of stock options, and the sale of stock. 13 16 CERTAIN ARRANGEMENTS AND TRANSACTIONS TRANSACTIONS WITH CHEMED CASH MANAGEMENT AND FINANCING. The Company regularly deposits funds in excess of its working capital requirements with Chemed for short-term investment and Chemed, on occasion, may make short-term loans to the Company for working capital needs.These unsecured deposits and loans bear interest at the rate determined on the basis of United States Treasury Notes.At January 31, 1996, the Company had $16,392,000 on deposit with Chemed.During the period January 1, 1995 through January 31, 1996, the largest amount on deposit with Chemed was $26,266,000.Chemed paid the Company $1,424,000 during 1995 as interest on amounts deposited by the Company with Chemed. During 1991, Chemed loaned to the Company $4,200,000 to partially finance the acquisition of Service America (formerly Convenient Home Services, Inc.).This loan bears interest at the rate determined on the basis of United States Treasury Notes.In addition, during 1993, Chemed loaned to the Company $4,224,000 to partially finance the acquisition of Encore Services Systems, Inc., a subsidiary of Service America.This loan bears interest at the fixed rate of 8.15 percent.At January 31, 1996, the Company had $8,424,000 on loan from Chemed, which was the largest amount on loan from Chemed at any time during the period January 1, 1995 through January 31, 1996.The Company paid Chemed $631,000 during 1995 as interest on amounts loaned to the Company from Chemed. SERVICE AND SUPPLY ARRANGEMENTS. As a subsidiary of Chemed and pursuant to an agreement with Chemed, the Company has used and will continue to use various financial, insurance, tax, audit, legal and other services provided by Chemed.The Company pays fees for these services based on Chemed's costs.During 1995, the Company paid Chemed $305,000 for such services. In addition, the Company has entered into a sublease agreement with Chemed pursuant to which the Company leases approximately 23,500 square feet of office space from Chemed on the 25th and 30th floors of the Chemed Center, Cincinnati, Ohio, at a rental equal to that paid by Chemed under its lease and for a term coterminous with Chemed's lease term which expires in 2006.For 1995, the Company paid Chemed lease payments under the sublease aggregating $491,000. STATE AND LOCAL INCOME TAXES. Should any state or locality impose, or should Chemed and the Company elect to pay, an income or franchise tax by combining or consolidating all or part of the income, losses, properties, payrolls, sales or other attributes of Chemed and the Company or one or more of their respective subsidiaries, the Company will reimburse Chemed for the Company's and its subsidiaries' share of such franchise or income tax.The amount to be reimbursed is equal to the tax that would have been required to be paid had the Company or any of its subsidiaries included in such combined or consolidated return filed a separate return without the inclusion of any income, losses, properties, payrolls, sales or other attributes of any related parent or subsidiary corporation. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS The Board of Directors has selected the firm of Price Waterhouse LLP as independent accountants for the Company and its consolidated subsidiaries for the year 1996.This firm has acted as independent accountants for Chemed since 1970 and for the Company and its consolidated subsidiaries since 1980.Although the submission of this matter to the stockholders is not required by law or by the By-Laws of the Company, the selection of Price Waterhouse LLP will be submitted for ratification at the Annual Meeting.The affirmative vote of the shares represented at the Annual Meeting, with abstentions having the effect of negative votes and broker non-votes deemed to be absent shares, will be necessary to ratify the selection of Price Waterhouse LLP as independent accountants for the Company and its consolidated subsidiaries for the year 1996.If the selection is not ratified at the meeting, the Board of Directors will reconsider its selection of independent accountants. 14 17 THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION. It is expected that a representative of Price Waterhouse LLP will be present at the Company's Annual Meeting. Such representative shall have the opportunity to make a statement if he desires to do so and shall be available to respond to appropriate questions raised at the meeting. STOCKHOLDER PROPOSALS Any proposals by stockholders intended to be included in the proxy materials for presentation at the 1997 Annual Meeting of Stockholders must be in writing and received by the Secretary of the Company no later than December 6, 1996. OTHER MATTERS As of the date of this Proxy Statement, the management knows of no other matters which will be presented for consideration at the Annual Meeting.However, if any other business should come before the meeting, the persons named in the enclosed proxy (or their substitutes) will have discretionary authority to take such action as shall be in accordance with their best judgment. EXPENSES OF SOLICITATION The expense of soliciting proxies in the accompanying form will be borne by the Company.In addition to solicitation by mail, the Company will request banks, brokers and other persons holding shares beneficially owned by others to send proxy materials to the beneficial owners and to secure their voting instructions, if any. The Company will reimburse such persons for their expenses in so doing.Officers and regular employees of the Company may, without extra remuneration, solicit proxies personally, by telephone or by telegram from some stockholders if such proxies are not promptly received.This Proxy Statement and the accompanying Notice of Meeting are sent by order of the Board of Directors. Naomi C. Dallob Secretary April 8, 1996 15 18 ROTO-ROOTER, INC. 2500 CHEMED CENTER 255 EAST FIFTH STREET PLEASE MARK, SIGN, DATE AND RETURN PROXY CINCINNATI, OHIO 45202 CARD PROMPTLY USING THE ENCLOSED ENVELOPE. ________________________________________________________________________________ THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY 20, 1996. The undersigned hereby appoints E. L. Hutton, W. R. Griffin and Kevin J. McNamara as Proxies, each with the power to appoint a substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of stock of Roto-Rooter, Inc. held of record by the undersigned on March 25, 1996, at the Annual Meeting of Stockholders to be held on May 20, 1996, or at any adjournment thereof. (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) (1) Election of Directors (mark only ONE box): / / FOR all nominees / / FOR nominees listed EXCEPT / / WITHHOLD ALL AUTHORITY listed. THOSE WHOSE NAMES I HAVE to vote in the selection STRICKEN. of directors Edward L. Hutton Neal Gilliatt Sandra E. Laney William R. Griffin Lawrence J. Gillis Kevin J. McNamara Brian A. Brumm Douglas B. Harper John M. Mount James A. Cunningham Will J. Hoekman Timothy S. O'Toole Naomi C. Dallob Thomas C. Hutton Donald E. Saunders Charles H. Erhart, Jr. Patrick L. Johnson D. Walter Robbins, Jr. George J. Walsh III (2) Ratifying the selection of independent accountants. / / FOR / / AGAINST / / ABSTAIN (3) In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS (1) AND (2). DATED: _______________________________________, 1996 (Be sure to date Proxy) SIGNED: _____________________________________________ _____________________________________________ (Please sign exactly as names appear at left) When signed on behalf of a corporation, partnership, estate, trust, or other stockholder, state your title or capacity or otherwise indicate that you are authorized to sign.