def14a
UNITED STATED SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
(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 þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Section 240.14a-12
G&K SERVICES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials.
o 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:
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G&K SERVICES, INC. 5995 Opus Parkway Minnetonka, Minnesota 55343
Notice of Annual Meeting of Shareholders, Thursday, November 12, 2009
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To the Shareholders of G&K
Services, Inc.:
The Annual Meeting of Shareholders of G&K Services, Inc.
will be held, pursuant to due call by our Board of Directors, at
the Marquette Hotel, 710 Marquette Avenue, Universe Meeting
Room, 50th Floor, IDS Building, Minneapolis, Minnesota, on
Thursday, November 12, 2009, at
10:00 a.m. Central Standard Time, or at any
adjournment or postponement thereof, for the purpose of
considering and taking appropriate action with respect to the
following:
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1.
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To elect the four Class II directors named in
the attached proxy statement to serve for terms of three years;
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2.
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To ratify the appointment of Ernst & Young LLP,
independent registered public accounting firm, as our
independent auditors for fiscal 2010; and
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3.
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To transact any other business as may properly come before the
meeting or any adjournment or postponement thereof.
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Pursuant to action of the Board of Directors, shareholders of
record on September 18, 2009 will be entitled to vote at
the meeting or any adjournment or postponement thereof.
A proxy for the meeting is enclosed. You are requested to
complete and sign the proxy, which is solicited by the Board of
Directors, and promptly return it in the enclosed envelope.
By Order of the Board of Directors
G&K Services, Inc.
Jeffrey L. Cotter
Vice President, General Counsel and Corporate Secretary
October 9, 2009
Proxy
Statement of G&K Services, Inc.
Annual
Meeting of Shareholders to be Held Thursday, November 12,
2009
Voting
by Proxy and Revocation of Proxies
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of G&K
Services, Inc. to be used at the annual meeting of our
shareholders to be held on Thursday, November 12, 2009, at
10:00 a.m. Central Standard Time, at the Marquette
Hotel, 710 Marquette Avenue, Universe Meeting Room,
50th Floor, IDS Building, Minneapolis, Minnesota, or at any
adjournment or postponement thereof, for the purpose of
considering and taking appropriate action with respect to the
following:
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1.
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To elect the four Class II directors named in
this proxy statement to serve for terms of three years;
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2.
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To ratify the appointment of Ernst & Young LLP,
independent registered public accounting firm, as our
independent auditors for fiscal 2010; and
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3.
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To transact any other business as may properly come before the
meeting or any adjournment or postponement thereof.
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The approximate date on which this proxy statement and the
accompanying proxy were first sent or given to shareholders was
October 9, 2009.
Each shareholder who signs and returns a proxy in the form
enclosed with this proxy statement may revoke the same at any
time prior to its use and prior to the annual meeting by giving
notice of such revocation to the company in writing, at the
meeting or by executing and delivering a new proxy to our
Corporate Secretary. Unless so revoked, the shares represented
by each proxy will be voted at the annual meeting and at any
adjournment or postponement thereof. Mere presence at the annual
meeting by a shareholder who has signed a proxy does not, alone,
revoke that proxy; revocation must be announced by the
shareholder at the time of the meeting. All shares which are
entitled to vote and are represented at the annual meeting by
properly executed proxies received prior to or at the annual
meeting, and not revoked, will be voted at the annual meeting
and any adjournment or postponement thereof.
Voting
Procedures
The company has one class of voting securities outstanding:
Class A Common Stock, $0.50 par value per share, of
which 18,498,452 shares were outstanding as of the close of
business on September 18, 2009, the record date for the
annual meeting. Each share of Class A Common Stock is
entitled to one vote on each matter put to a vote of
shareholders. Our Class A Common Stock is referred to in
this proxy statement as common stock. Only shareholders of
record at the close of business on the record date for the
annual meeting will be entitled to vote at the annual meeting or
any adjournment or postponement thereof. A quorum, consisting of
the holders of a majority of the stock issued and outstanding
and entitled to vote at the annual meeting is requisite for the
transaction of business at the annual meeting. Such quorum must
be present, either in person or represented by proxy, for the
transaction of business at the annual meeting, except as
otherwise required by law, our Amended and Restated Articles of
Incorporation or our Amended and Restated Bylaws.
All shares entitled to vote and represented by properly executed
proxies received prior to the annual meeting, and not revoked,
will be voted as instructed on those proxies. If no instructions
are indicated, the shares will be voted as recommended by the
Board of Directors. If any director nominee should withdraw or
otherwise become unavailable for reasons not presently known,
the proxies which would have otherwise been voted for that
director nominee may be voted for a substitute director nominee
selected by our Board of Directors.
A plurality of votes cast is required for the election of each
director in Proposal No. 1. Each other proposal
requires the affirmative vote of the holders of the greater of
(i) a majority of the voting power of shares present and
entitled to vote on that item of business, or (ii) a
majority of the voting power of the minimum number of shares
entitled to vote that would constitute a quorum for the
transaction of business at the annual meeting.
A shareholder who abstains with respect to any proposal is
considered to be present and entitled to vote on that proposal,
and is effectively casting a negative vote. A shareholder,
including a broker, who does not give authority to a proxy to
vote, or withholds authority to vote, on any proposal shall not
be considered present and entitled to vote on that proposal.
The Board of Directors unanimously recommends that you vote
FOR the election of each director nominee named in
this proxy statement and FOR the ratification of
Ernst & Young LLPs appointment as our
independent accountant for fiscal 2010.
PROPOSAL NUMBER
1:
Election
of Class II Directors
Pursuant to our Amended and Restated Articles of Incorporation,
our Board of Directors is comprised of not less than three and
not more than 12 directors, and our Amended and Restated
Bylaws state that the number of directors is established by
resolution of our Board of Directors. Presently, our Board of
Directors consists of ten directors. Pursuant to our Amended and
Restated Articles of Incorporation, the directors are divided
into three classes, designated as Class I, Class II
and Class III, respectively, and are elected to serve for
staggered three-year terms of office that expire in successive
years. The current terms of office for the directors in
Class I, Class II and Class III expire,
respectively, at the 2011, 2009 and 2010 annual
shareholders meetings.
Ms. Richter and Messrs. Milroy, Wright and Baszucki,
each of whom currently serves as a Class II director, have
been nominated by our Board of Directors to serve as our
Class II directors for a three-year term commencing
immediately following the annual meeting and expiring at our
2012 annual shareholders meeting, or until his or her
successor is elected and qualified. Pursuant to their employment
agreements, Messrs. Milroy and Wright are required to
resign from the Board of Directors if their employment with us
is terminated. If elected, each nominee has consented to serve
as a Class II director.
Set forth below is information regarding the four individuals
nominated for election to our Board of Directors as
Class II directors, which includes information furnished by
them as to their principal occupations for the last five years,
certain other directorships held by them, and their ages as of
the date of this proxy statement.
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Name (and age) of
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Principal Occupation, Past Five Years
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Director
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Director/Nominee
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Business Experience and Directorships in Public Companies
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Since
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Class II Nominees:
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Douglas A. Milroy (50)
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Mr. Milroy has served as our Chief Executive Officer and a
director since May 2009. Previously, Mr. Milroy served as
our President, Direct Purchase and Business Development from
November 2006 to May 2009. Mr. Milroy joined us with more
than 20 years of global leadership experience in
business-to-business
organizations. Most recently, since 2004, Mr. Milroy was
managing director of The Milroy Group LLC, a firm focused on the
acquisition and management of industrial companies in
partnership with other investors. Prior to that, between 2000
and 2004, Mr. Milroy was the Vice President and General
Manager Food and Beverage North America and Water
Care for Ecolab, Inc. Mr. Milroy has also held senior
positions with FMC Corporation and McKinsey & Company.
Mr. Milroy serves on the board of JSJ Corporation, where he
chairs the Compensation Committee and serves on the Audit
Committee. Mr. Milroy holds a Bachelor of Mechanical
Engineering degree from the University of Minnesota and an
M.B.A. from the Harvard Business School.
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2009
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Jeffrey L. Wright (47)
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Mr. Wright has served as our Executive Vice President and a
director since May 2009 and as our Chief Financial Officer since
1999. Previously, Mr. Wright served as our Senior Vice
President from January 2004 until May 2009, our Secretary from
February 1999 until May 2004, and our Treasurer from February
1999 until November 2001. Mr. Wright was employed with BMC
Industries, Inc. from 1996 until the time he joined the company,
serving as its Controller from 1996 to 1998 and its Treasurer
from 1998 to 1999. From 1993 to 1996, Mr. Wright was
Treasurer for Employee Benefit Plans, Inc. From 1984 to 1993,
Mr. Wright was employed with Arthur Andersen &
Co. Mr. Wright serves as Chairman of the Textile Rental
Services Association and is a director of Hawkins, Inc. (NASDAQ:
HWKN), where he serves on the Audit and Compensation Committees.
Mr. Wright holds a Bachelor of Arts Accounting
degree from the University of St. Thomas.
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2009
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Paul Baszucki (69)
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Mr. Baszucki is a director and serves as a member of the
Corporate Governance Committee of our Board of Directors.
Mr. Baszucki served as a director and Chair of the Board of
Directors of Norstan, Inc. from May 1997 until December 2004,
and as its Chief Executive Officer from 1986 until May 1997, and
again from December 1999 to October 2000. Mr. Baszucki also
serves as a director and member of the Audit and Compensation
Committees of WSI Industries, Inc. (NASDAQ: WSCI), a precision
contract machining company primarily servicing the energy
aerospace/avionics industry and recreational vehicles markets.
Mr. Baszucki has been a director of WSI Industries since
1988.
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1994
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Alice M. Richter (56)
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Ms. Richter is a director and serves as Chair of the Audit
Committee of our Board of Directors. Ms. Richter is also
one of our Audit Committee Financial Experts. Ms Richter has
been retired since June 2001. Prior to her retirement,
Ms. Richter was a certified public accountant with KPMG LLP
for 26 years. Ms. Richter joined KPMGs
Minneapolis office in 1975 and was admitted to the KPMG
partnership in 1987. During her tenure at KPMG, Ms. Richter
served as the National Industry Director of KPMGs U.S.
Food and Beverage practice and also served as a member of the
Board of Trustees of the KPMG Foundation from 1991 to 2001.
Ms. Richter is also a member of the Boards of Directors of
West Marine, Inc. (NASDAQ: WMAR), where she also serves as Chair
of the Audit Committee, Fingerhut Direct Marketing, Inc., where
she serves as the Chair of the Audit Committee and Thrivent
Financial for Lutherans, where she serves on the Audit and
Technology Committees.
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2003
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2
Directors
and Executive Officers of the Company
Set forth below is information regarding our executive officers
and the balance of our directors, which includes information
furnished by them as to their principal occupations for the last
five years, certain other directorships held by them, and their
ages as of the date of this proxy statement.
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Director
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Name
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Age
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Title
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Term Expires
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Douglas A. Milroy
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50
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Chief Executive Officer and Director (Class II)
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2009
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Jeffrey L. Wright
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47
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Executive Vice President, Chief Financial Officer and Director
(Class II)
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2009
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Robert G. Wood
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61
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President, G&K Services Canada Inc.
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Jeffrey L. Cotter
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42
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Vice President, General Counsel and Corporate Secretary
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Timothy N. Curran
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48
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Senior Vice President, U.S. Field
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Paul Baszucki
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69
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Director (Class II)
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2009
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John S. Bronson
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61
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Director (Class III)
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2010
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Lynn Crump-Caine
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53
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Director (Class I)
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2011
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J. Patrick Doyle
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46
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Director (Class I)
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2011
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Wayne M. Fortun
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60
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Director (Class III)
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2010
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Ernest J. Mrozek
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56
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Director (Class III)
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2010
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M. Lenny Pippin
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62
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Director, Chairman of the Board and Presiding Director (Class I)
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2011
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Alice M. Richter
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56
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Director (Class II)
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2009
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Douglas A. Milroy See information
under Election of Class II Directors above.
Jeffrey L. Wright See information
under Election of Class II Directors above.
Robert G. Wood Mr. Wood has served as
President of G&K Services Canada Inc. and affiliated
entities since 1998, and as one of our Regional Vice Presidents
between 1997 and 1998. Mr. Wood joined the company in 1995
as a General Manager and served as an Executive Vice President
of the company from May 2000 until July 2002. Prior to joining
the company, Mr. Wood was Vice President of Marketing and
Director of Sales with Livingston International, Inc., where he
spent 23 years in a variety of operating, sales, service
and marketing positions.
Jeffrey L. Cotter Mr. Cotter has served
as our Vice President, General Counsel and Corporate Secretary
since June 2008. Mr. Cotter joined the company as Senior
Corporate Counsel in February 2006, and was named Director of
Legal Services and Corporate Secretary in September 2007. Prior
to joining the company, since 2003, Mr. Cotter was a
shareholder in the law firm of Leonard, Street and Deinard
Professional Association, where he specialized in securities
law, as well as in mergers, acquisitions and related
transactions. Prior to being a shareholder in Leonard, Street
and Deinard Professional Association, Mr. Cotter was an
associate at the firm
(1997-1999;
2001-2003),
as well as Assistant General Counsel of Stockwalk.com, Inc.
(1999-2001)
and an associate in the law firm of Briggs & Morgan,
P.A. Mr. Cotter also serves on the Textile Rental Services
Associations Government Affairs Committee.
Timothy N. Curran. Mr. Curran has served as our
Senior Vice President, U.S. Field since October 2008.
Mr. Curran joined the company as Regional Vice President of
the Southeast Region in 2004. Prior to joining the company,
Mr. Curran served as Vice President, Operations for a
distribution division of WebMD from 2002 to 2004, and served as
Division General Manager and Director of Business
Development for OMNOVA Solutions, a performance chemical and
decorative products company, from 2000 to 2002. Mr. Curran
also held various operating and leadership positions with
Honeywell International Inc. from 1993 to 2000.
Paul Baszucki See information under
Election of Class II Directors above.
John S. Bronson Mr. Bronson is a
director of the company and serves as a member of the
Compensation and Corporate Governance Committees of our Board of
Directors. Mr. Bronson was Senior Vice President, Human
Resources for Williams-Sonoma, Inc., a specialty retailer of
home furnishings, from 1999 to 2003. Prior to his employment
with Williams-Sonoma, Inc., Mr. Bronson held several senior
human resource-related management positions with PEPSICO, from
1979 to 1999, most recently as its Executive Vice President,
Human Resources Worldwide for Pepsi-Cola Worldwide.
Lynn Crump-Caine Ms. Crump-Caine is a
director of the company and serves as a member of the Audit
Committee of our Board of Directors. Ms. Crump-Caine
founded Outsidein Consulting and she currently serves as its
Chief Executive Officer. Between 1974 and her retirement in
2004, Ms. Crump-Caine served in various senior capacities
with the McDonalds Corporation, including as its Executive
Vice President, Worldwide Operations and Restaurant Systems,
from 2002 to 2004, its Executive Vice President,
U.S. Restaurant Systems, from 2000 to 2002, and its Senior
Vice President, U.S. Operations, from 1998 to 2000.
Ms. Crump-Caine serves on the board of Krispy Kreme
Doughnuts, Inc. (NYSE: KKD), where she chairs the Compensation
Committee and serves on the Nominating and Corporate Governance
Committees. She also chairs the board of Advocate Health Care
and is a member of that boards Executive, Audit and
Compensation Committees.
J. Patrick Doyle Mr. Doyle is a
director and serves as a member of the Compensation Committee of
our Board of Directors. Mr. Doyle currently serves as
President of Dominos U.S.A. for Dominos Pizza, Inc.
(NYSE: DPZ) Mr. Doyle previously served as Dominos
Executive Vice President of U.S. Corporate Stores from
October 2004 to September 2007, as Dominos Executive Vice
President of International from May 1999 to October 2004, as
Dominos interim Executive Vice President, Build the Brand,
from
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December 2000 to July 2001 and as Dominos Senior Vice
President of Marketing from the time he joined Dominos in
1997 until May 1999. Prior to joining Dominos,
Mr. Doyle served as Vice President and General Manager for
the U.S. baby food business of Gerber Products Company.
Wayne M. Fortun Mr. Fortun is a director
and serves as Chair of the Compensation Committee of our Board
of Directors. Mr. Fortun was elected director, President
and Chief Operating Officer of Hutchinson Technology, Inc.
(NASDAQ: HTCH), a world leader in precision manufacturing of
suspension assemblies for disk drives, in 1983 and was appointed
its Chief Executive Officer in May 1996. Mr. Fortun also
serves as a director of C.H. Robinson Worldwide, Inc. (NASDAQ:
CHRW), a global provider of multimodal transportation services
and logistics solutions.
Ernest J. Mrozek Mr. Mrozek is a
director and serves as a member of the Audit Committee of our
Board of Directors. Mr. Mrozek is also one of our Audit
Committee Financial Experts. Mr. Mrozek served as Vice
Chairman and Chief Financial Officer of The ServiceMaster
Company, a residential and commercial service company, from
November 2006 to his retirement in March 2008. Mr. Mrozek
also served as President and Chief Financial Officer of The
ServiceMaster Company from January 2004 to November 2006 and as
its President and Chief Operating Officer from 2002 to January
2004. Mr. Mrozek joined ServiceMaster in 1987 and has held
various senior positions in general management, operations and
finance. Prior to joining ServiceMaster, Mr. Mrozek spent
12 years with Arthur Andersen & Co.
Mr. Mrozek serves on the board of Chemed Corporation (NSYE:
CHE), where he serves on the Audit Committee.
M. Lenny Pippin Mr. Pippin is a
director, serves as the Chairman and Presiding Director of our
Board of Directors and serves as Chair of the Corporate
Governance Committee of our Board of Directors. Mr. Pippin
served as Vice Chairman, President and Chief Executive Officer
of The Schwan Food Company, a branded frozen-food company, from
November 1999 until February 2008. Mr. Pippin is currently
a business consultant. Prior to joining Schwans,
Mr. Pippin served as President and Chief Executive Officer
of Lykes Brothers, Inc., a privately held corporation with
operating divisions in the food, agriculture, transportation,
energy and insurance industries.
Alice M. Richter See information under
Election of Class II Directors above.
Executive
Compensation
Compensation
Discussion and Analysis
The following Compensation Discussion and Analysis describes the
material elements of our total compensation program for our
Named Executive Officers (NEOs). Our NEOs are our CEO, our
Executive Vice President and Chief Financial Officer, and the
three most highly compensated executive officers, other than our
CEO and our Executive Vice President and Chief Financial
Officer, who were serving as our executive officers at the end
of fiscal 2009. In fiscal 2009, our NEOs also include our former
Chairman of the Board and CEO and our former President,
U.S. Rental Operations. The discussion focuses on the
program and decisions for the 2009 fiscal year. We address why
we believe the program is right for our company and our
shareholders, and we explain how compensation is determined.
Overview
What person or
group is responsible for determining the compensation levels of
executive officers?
The Compensation Committee of our Board of Directors, which
consists entirely of independent directors and whose membership
is determined by the Board of Directors, is responsible for:
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approving the design and implementation of our executive
compensation program;
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regularly reporting on committee actions and recommendations at
board meetings;
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working with the Audit and Corporate Governance Committees of
our Board of Directors, as appropriate; and
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reviewing NEO compensation and making recommendations to the
Board of Directors, which is responsible for approving all NEO
compensation.
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The Hay Group serves as an independent compensation consultant
to the Compensation Committee of our Board of Directors to
perform the functions outlined below. Although the Hay Group
primarily supports the Compensation Committee, on occasion, the
Hay Group has provided market data and general compensation
consultation to the company. The Compensation Committee also
works with our human resources and compensation and benefits
professionals on the design and implementation of executive
compensation programs and certain retirement plans that are of
material significance.
The Compensation Committee annually reviews NEO compensation.
The Compensation Committee considers information provided by its
independent compensation consultant, and reviews and recommends
compensation actions for NEOs for approval by our Board of
Directors.
Role
of Compensation Consultant
The Hay Group provides independent compensation consultation and
advice to the Compensation Committee to ensure that executive
compensation decisions are aligned with the long-term interests
of shareholders and with corporate goals and strategies. As
requested, the Hay Group provides guidance as it relates to the
following committee responsibilities:
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review Compensation Committee agendas and supporting materials
in advance of each meeting;
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attend Compensation Committee meetings;
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make recommendations on companies to include in our peer group,
analyze the selected peer group information and review other
survey data for competitive comparisons;
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review the executive compensation programs and competitive
positioning for reasonableness and appropriateness;
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review the companys total executive compensation program
and advise the Compensation Committee of plans or practices that
might be changed to improve effectiveness;
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oversee survey data on executive pay practices and amounts that
come before the Compensation Committee;
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provide market data and recommendations on CEO compensation
without prior review by management, except for necessary fact
checking;
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provide market data and recommendations on director compensation;
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review any significant executive employment or
change-in-control
provisions in advance of being presented to the Compensation
Committee for approval;
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periodically review the Compensation Committees charter
and recommend changes;
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advise the Compensation Committee on best-practice ideas for
board governance of executive compensation as well as areas of
concern and risk in the companys program;
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advise the Compensation Committee on management proposals, as
requested; and
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undertake special projects at the request of the Compensation
Committee.
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In fiscal 2009, as part of its ongoing services to the
Compensation Committee as described above, a Hay Group
representative attended all regularly scheduled meetings of the
Compensation Committee (either in person or telephonically) and
worked on the following projects:
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reviewed current peer group and made recommendation on peer
group changes;
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participated in review and design of the companys
long-term incentive and equity programs;
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conducted market analysis of the Board of Director compensation
(in fiscal 2009, no changes were made to the Board of
Directors compensation package, other than to address
compensation for Mr. Pippin as Chairman of our board);
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reviewed market analysis of Chairman compensation and made
recommendations on Chairmans compensation package;
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conducted market analysis of CEO compensation and made
recommendations on changes to the CEOs total compensation
package; and
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reviewed market analysis of Executive Vice President and Chief
Financial Officer compensation and made recommendations on the
same.
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Certain of our senior officers also have roles in the
compensation process, as follows:
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Our CEO recommends compensation actions (other than for himself)
and submits those recommendations to the Compensation Committee
for review.
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Our CEO provides his perspective on recommendations provided by
the compensation consultant regarding compensation program
design issues.
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Our Senior Vice President, Human Resources plays an active role
by providing input on plan design, structure and cost, and
assessing the implications of all recommendations on
recruitment, retention and motivation of company employees, as
well as company financial results.
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When requested by the Compensation Committee, other executive
officers, such as the Executive Vice President and Chief
Financial Officer, Vice President and Controller, and our Vice
President, General Counsel and Corporate Secretary, may also
review recommendations on plan design, structure and cost, and
provide a perspective to the Compensation Committee on how these
recommendations may affect recruitment, retention and motivation
of our employees, as well as our financial results.
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Discussion
and Analysis
The following discussion and analysis is focused on our NEO
compensation program. The discussion focuses on the program and
decisions for fiscal 2009 and specifically answers the following
questions:
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1.
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What are the objectives of our compensation program?
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2.
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What is the compensation program designed to reward?
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3.
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What is each element of compensation?
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4.
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Why do we choose to pay each element?
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5.
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How do we determine the amount/formula for each element?
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6.
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How does each element and our decision regarding that element
fit into our overall compensation objectives and affect
decisions regarding other elements?
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What are the
objectives of our compensation program?
The objectives of our compensation programs are to provide
compensation and benefits plans that enable us to attract,
retain and motivate highly qualified, experienced executives and
reward them for performance that creates long-term shareholder
value. We seek to increase shareholder value by rewarding
performance with cost-effective compensation that ensures
appropriate linkage between pay, company performance, and
results for our shareholders. We strive to reward employees
fairly and competitively through a mix of base salary, short and
long term incentives, benefits, career growth and development
opportunities. We believe the mix of base pay, short term
incentives, long term incentives and other benefits drives
performance.
What is the
compensation program designed to reward?
The compensation program strives to effectively utilize elements
of compensation under a total reward philosophy that combines
annual and multi-year reward opportunities, which are designed
to:
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provide competitive levels of compensation that link
compensation to the achievement of our annual objectives and
long-term goals;
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reward the achievement of company performance
objectives; and
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recognize and reward strong individual initiative and team
performance.
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5
Shareholder value and corporate performance are realized through
our ongoing business strategy to:
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achieve
year-over-year
growth in revenue and earnings;
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drive strong cash flow;
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maintain financial strength and flexibility; and
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reward strong individual performance that is aligned with
company goals and objectives.
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What is each
element of compensation?
There are five components of our executive compensation program:
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base salary;
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annual management incentive compensation (referred to as our
MIP);
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long-term equity-based compensation;
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benefits and perquisites; and
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severance and
change-in-control
benefits.
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Base
Salary
Base salary is fixed compensation designed to compensate NEOs
for their level of experience and continued performance
excellence in their individual roles. Providing executives with
competitive base salaries allows us to attract high-caliber
talent and retain executives on-going services by
providing them with a level of financial certainty. Base salary
is set in relation to the competitive market for the position
and individual performance. We review executive base salary on
an annual basis (comparing to the median of the competitive
market for each position), and increases are based on individual
performance and prevailing market conditions.
For NEOs (excluding the CEO), individual performance is assessed
against business performance objectives and individual
performance at mid-year and at fiscal year-end. The NEO provides
a self-evaluation with significant accomplishments and
challenges during his performance review with the CEO. Annually,
the CEO provides a performance review of the NEOs with our Board
of Directors to assess each NEOs performance, strengths
and accomplishments, along with challenges and areas for
improvement. The CEO makes compensation recommendations (base,
equity grant, assessment of individual performance on the MIP
calculation), which are reviewed by the Compensation Committee
and then submitted to the Board of Directors for final review
and approval.
The CEO must also conduct a self-assessment of his performance
over the fiscal year, which he reviews with the Chairs of the
Compensation and Corporate Governance Committees of our Board of
Directors. The Board of Directors also completes an evaluation
of the CEOs performance. The Chairs of the Compensation
and Corporate Governance Committee review with the Corporate
Governance Committee the specific performance recommendations.
The Hay Group then works with the Chair of the Compensation
Committee to make compensation recommendations for review by the
Compensation Committee and final review and approval by the
Board of Directors. In fiscal 2009, merit increases for the NEOs
ranged from 0.0% to 4.5%, reflecting differences in performance,
pay relevant to market and consideration of internal equity.
Annual
Management Incentive Plan
Our MIP is a variable pay program tied to achievement of annual
business and individual performance goals. The MIP is designed
to compensate NEOs for meeting specific company financial goals
and for individual performance. MIP target incentive levels are
based on competitive market data, job content and
responsibilities, and internal equity. Target incentive levels
are expressed as a percentage of base salary, as follows:
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Target Incentive
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Position
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(as a % of Base Salary)
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Former Chairman and CEO (Marcantonio)
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80
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%
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CEO (Milroy)
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75
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%
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Executive Vice President and Chief Financial Officer
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55
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%
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President, G&K Services Canada
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50
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%
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Senior Vice President
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40
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%
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Vice President
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40
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%
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As is discussed in more detail below, in May 2009, together with
Mr. Marcantonio, we mutually agreed to terminate his
employment with the company. When Mr. Milroy was named CEO
in May 2009, his target incentive was set at 75% (instead of
80%), which reflects that his position does not include Chairman
of the Board responsibilities. The target incentive levels for
the remaining NEOs did not change.
Management
Incentive Plan Payouts
MIP payouts are calculated based on actual performance measures
set at the beginning of each fiscal year, which are reviewed and
approved by the Compensation Committee. The measures align NEOs
with clear
line-of-sight
responsibility to:
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Quantitative Financial Measures: revenue and
earnings benchmarks have been chosen as the key financial
measures for the MIP because they best represent our primary
short-term growth goals and align with and support the
attainment of our long-term strategy.
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Individual Discretionary: 100% discretionary
assessment of performance, which considers all dimensions of
performance over the year, including the individual performance,
functional leadership, teamwork and collaboration, and results
achieved on special projects.
|
6
Plan
Measures and Weights and Performance Targets
The plan measures and weights, as well as the performance
targets and results, are as follows:
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Weights
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Results
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Performance Targets
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for Financial Measures
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EVP, President
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G&K Canada,
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Payout
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Plan Measures
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CEO(1)
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SVP and VP
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Threshold
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Target
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Maximum
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Achievement
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Factor
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Company Financial Measures:
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(30% Payout)
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(100% Payout)
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(200% Payout)
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Revenue
Growth(2)
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40%
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35
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%
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$1,012.5 M
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$1,036 M
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$1,052.8 M
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$935.6 M
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0%
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EPS
Growth(3)
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40%
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35
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%
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$2.33
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$2.48
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$2.58
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$(3.94)
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0%
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Individual Discretionary
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20%
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30
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%
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(0%
Payout)
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(100%
Payout)
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(200%
Payout)
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(4)
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(4)
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Total
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100%
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100
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%
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(1)
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Weights listed for CEO are in reference to Mr. Milroy, as
Mr. Marcantonio was not eligible for a MIP payment because
he was not employed at the end of the fiscal year.
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(2)
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In order to earn a payout for the company revenue growth
objective, performance must be achieved at or above the
threshold level and the companys EPS performance must
exceed the EPS level achieved in the previous fiscal year.
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(3)
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In order to earn a payout for the company earnings per share
growth objective, performance must be achieved at or above the
threshold level.
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(4)
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The actual payouts for the discretionary component of the MIP
achieved for each NEO for fiscal 2009, expressed as a percentage
of the applicable target incentive level, were as follows:
Mr. Milroy 54%, Mr. Wright
40%, Mr. Curran 40%, Mr. Wood
25% and Mr. Cotter 35%.
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Plan measures and weights have been carefully reviewed by the
Compensation Committee, and approved by the Board of Directors.
Performance targets are recommended prior to each fiscal year
based on business unit plans, expected progress toward long-term
goals, and anticipated market conditions. The annual performance
targets for company revenue growth and earnings per share are
then presented to and approved by the Compensation Committee of
the Board of Directors. MIP payouts for company financial
measures are based on actual business results compared to the
performance targets, which were approved at the beginning of the
fiscal year.
At the end of the fiscal year, a rating of the results is
recommended by the CEO for his direct reports, and presented to
the Compensation Committee for review and to the Board of
Directors for final review and approval. The CEOs results
are evaluated by the Compensation and Corporate Governance
Committees, with their recommended rating on individual
performance submitted to the Board of Directors for final review
and approval.
MIP
Calculation
The MIP is calculated as follows:
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1.
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Target incentive = base salary x target incentive % x % of year
in eligible position
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2.
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Incentive score for each performance measure = payout factor x
weight (% allocated to the measure)
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3.
|
Incentive amount calculated for each performance measure =
incentive score x target incentive opportunity
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4.
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Total MIP payout = sum of all incentive amounts calculated for
each performance measure
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The Compensation Committee of our Board of Directors determines
incentive compensation plan design for company financial
measures based generally on achievement of certain targets
against an internal business plan approved annually by the Board
of Directors. Over the past three years, the payout percentage
has ranged from 0% to 146% of each executive participants
target award opportunity for these measures, with an average
payout percentage equal to approximately 70.5% of the target
award opportunity. MIP payouts are currently capped at 200% of
target.
In making MIP payments to the NEOs, the Compensation Committee
approved and recommended the inclusion of a discretionary
component to recognize each NEOs significant contributions
to the company and strong leadership during the fiscal year. The
decision to move to a discretionary component was based on a
desire to encourage team achievement to drive company
performance and functional leadership. In calculating the
CEOs discretionary award, the committee reviewed the
CEOs individual performance and market data provided by
the Hay Group. In calculating the amount of the remaining
NEOs discretionary awards, the CEO evaluated each
NEOs pay based on his knowledge regarding individual NEO
performance and total company performance. The CEO then
recommended a discretionary bonus amount to the committee, after
which the committee considered such recommendation in light of
the individual NEOs performance, company results, the
bonus amounts paid to such NEO for fiscal 2007 and 2008 and
competitive market data. Following committee approval of the MIP
awards, our Board of Directors approved the final bonus amounts.
Long-Term
Equity Compensation
Long-term equity compensation supports strong organization
performance over a period of time (typically three years or
more). Long-term equity compensation aligns NEOs
compensation with shareholders interests, rewards NEOs for
increasing long-term shareholder value, and promotes executive
retention. Long-term equity award targets for each position are
established each year based on competitive market data, also
taking into account the rate at which equity grants deplete the
number of shares
7
available for grant (run rate) and shareholder dilution.
Individual equity awards are based on individual performance.
In fiscal 2009, we granted two types of equity awards:
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Non-Qualified Stock Options each stock option
represents the right to purchase a specified number of shares of
our common stock at a price equal to the fair market value of
the common stock on the date of grant. Options vest and become
exercisable in equal installments over three years and have a
term of ten years.
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Restricted Stock restricted stock represents
the right to own common stock after the time restrictions lapse.
Other than Mr. Wrights May 2009 stock grant, all of
which will vest on May 7, 2012, restrictions on restricted
stock lapse in equal installments over five years
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Vesting
Schedules and Term Lengths
Vesting schedules and term lengths for new grants are
periodically reviewed by the Compensation Committee. The
Compensation Committee has determined that the existing vesting
schedule and term lengths provide the appropriate balance
between employee retention and reward for performance.
Grant
Targets and Mix
Our equity grant practice is to use a combination of stock
options (to reward growth) and restricted stock (to support
retention). Each year, we establish target grant values taking
into consideration market median grant levels while still
managing annual run rate and shareholder dilution within
appropriate levels. We then evaluate the mix with the objective
of delivering as much of the equity grant in stock options as
possible to drive growth. For fiscal 2009, the Compensation
Committee approved equity compensation grants allocated among
the types of awards, as follows:
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Percentage of Target Expected Value
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|
Officer
|
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Stock Options
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Restricted Stock
|
|
Marcantonio Former Chairman and CEO
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|
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50
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%
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50
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%
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Milroy CEO
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40
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%
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|
60
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%
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Remaining NEOs
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|
40
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%
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|
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60
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%
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|
After establishing the mix, the target grant levels are
converted into shares using the following formulas:
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|
|
Stock Options: (percentage allocated to stock options x
target grant level)/Black Scholes value
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|
|
Restricted Stock: (percentage allocated to restricted
stock x target grant level/(Black Scholes value x conversion
factor))
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The conversion factor used in the restricted stock formula is
determined based on our stock price volatility, and for fiscal
2009 was 4:1.
Grant
Practice
Historically, our grant practice was to grant equity annually on
or about the first business day of September and after the
fiscal year end earnings announcement, which generally occurred
in mid-August. The price per share of the companys stock
was set based on market close on the day of grant. In fiscal
2008, we changed our grant practice going forward and made
grants effective as of the date of the August Board of
Directors meeting, which occurred after the year end
earnings announcement. On occasion, the Compensation Committee
may grant stock options or restricted stock to NEOs at times
other than the annual grant date (e.g., upon hire or promotion),
with the grant price set based on market close on the day of
grant.
Equity
Holding Guidelines
We believe that requiring executive officers to hold significant
amounts of our common stock strengthens the alignment of the
executive officers interests with those of our
shareholders and promotes achievement of long-term business
objectives. Beginning in August 2004, we required NEOs to hold
one-half of all shares granted for three years, net of the
number of shares required to cover estimated taxes and exercise
cost. The holding requirements apply to restricted stock at the
time of vesting and stock options at the time of exercise.
Effective in fiscal 2008, we modified our equity ownership
guidelines for our executive officers to allow NEOs five years
to achieve ownership targets, which are five times base salary
for our CEO and three times base salary for the remaining NEOs.
Benefits
Benefits include health and welfare, retirement, and perquisite
programs that are intended to provide financial protection and
security to NEOs and their families and to reward their
dedication and long-term commitment to the company. Our
sponsorship (coupled with competitive employee cost-sharing
arrangements) of these plans is critical to our ability to
attract and retain the talent we need to support our overall
business objectives. NEOs have the opportunity to participate in
the same retirement, health and welfare plans as our other
salaried employees, as well as the following supplemental
benefits:
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|
|
Supplemental Executive Retirement Plan (SERP) (this plan was
frozen as of January 1, 2007)
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|
|
Executive Deferred Compensation Plan (DEFCO)
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|
|
Executive long-term disability insurance
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Financial planning services
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n
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Former Chairman and CEO (Marcantonio) $7,500 each
year
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n
|
CEO (Milroy) $7,500 each year
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n
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Executive Vice President and Chief Financial Officer
$5,000 each year
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n
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President, G&K Services Canada and Senior Vice
Presidents $5,000 each year
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|
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n
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Vice President, General Counsel and Corporate
Secretary $3,500 each year
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|
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Executive physical
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|
|
Leased automobiles for NEOs (in process of being phased out and
replaced with a weekly taxable car allowance for those
individuals who had a leased automobile)
|
8
Fringe
Benefits
We periodically reassess our level of fringe benefits. In 2007,
we redesigned our company-sponsored retirement program for
United States non-union employees, including the United States
NEOs, as well as for our union employees enrolled in the
program, to maintain competitive retirement benefits while
reducing the volatility of future company defined benefit
pension costs. The new program, which took effect
January 1, 2007, included freezing the qualified pension
and SERP benefits and enhancing the 401(k) plan and the DEFCO.
In fiscal 2008, we decided to phase out leased automobiles for
NEOs over the next two years as automobiles come off lease. This
fringe benefit was replaced with a weekly taxable car allowance.
The following NEOs currently receive the following weekly car
allowance: Mr. Wood $413 CAD,
Mr. Wright $375 and Mr. Curran
$231.
Severance
and
Change-in-Control
Benefits: Employment Agreements
Severance and
change-in-control
benefits include salary and certain benefits that are paid in
the event of termination of employment under certain
circumstances, including following a change in control.
Severance and
change-in-control
benefits help attract executive talent, assist with the career
transition of executives, and create an environment that
provides for adequate business transition and knowledge transfer
during times of change. The level of this severance protection
is established to be competitive with market best practices. We
utilize employment agreements for the following levels in our
organization: CEO, Executive Vice President and Chief Financial
Officer, President and Senior Vice President. Specifically, we
have entered into employment agreements with
Messrs. Milroy, Wright, Wood and Curran that provide
benefits to the executive if the individual is terminated after
a change in control of the company. Specifically, benefits are
provided if the executive is terminated within one year
following a change in control if the termination is by the
employer without cause, or by the executive for good reason. The
various key terms are defined specifically in each agreement.
Severance benefits are payable in such circumstances. In the
event of a change in control, and regardless of whether the
executive is terminated, unvested equity awards will vest
immediately upon the change in control, consistent with the
provisions of our equity compensation plan.
These agreements were put in place and the related triggers were
selected to assure that we will have the continued dedication,
undivided loyalty and objective advice and counsel from these
key executives in the event of a proposed transaction, or the
threat of a transaction, which could result in a change in
control of the company. We also believe that these agreements
are beneficial to us because, in consideration for these
severance arrangements, the executives agree to noncompetition
and non-solicitation covenants for a period of time following
termination of employment.
In fiscal 2009, we amended the employment agreements of
Messrs. Milroy and Wright in connection with their
respective promotions. Below is a summary of the changes:
Mr. Milroy:
The amendment to Mr. Milroys employment agreement
(i) reflects his appointment to serve as Chief Executive
Officer; (ii) provides for his resignation from all
positions held with us if his employment with us is terminated,
including any of our company boards on which he serves as a
director; and (iii) establishes a severance benefit equal
to 1.99 times his annual base salary upon a termination by us
without cause or, following a change in control, upon a
termination by Mr. Milroy for good reason (previously,
Mr. Milroys employment agreement provided for a
severance benefit equal to 11 months of base salary). At
the time of the amendment to Mr. Milroys employment
agreement, our Board of Directors, upon the recommendation of
the Compensation Committee, modified the terms of
Mr. Milroys compensation arrangements, including
(i) an increased annual base salary to $550,000;
(ii) a new MIP target incentive of 75% of his annual base
salary; (iii) an award of 20,000 restricted shares of our
common stock, vesting in equal installments on each of the next
five anniversaries of the May 7, 2009 award date;
(iv) an option to purchase up to 40,000 shares of our
common stock, vesting in equal installments on each of the next
three anniversaries of the May 7, 2009 grant date; and
(v) financial planning services of up to $7,500 annually.
Mr. Wright:
The amendment to Mr. Wrights employment agreement
(i) reflects his appointment to serve as Executive Vice
President and Chief Financial Officer; and (ii) provides
for his resignation from all positions held with us if his
employment with us is terminated, including any of our company
boards on which he serves as a director. At the time of the
amendment to Mr. Wrights employment agreement, our
Board of Directors, upon the recommendation of the Compensation
Committee, approved an award to Mr. Wright of 15,000
restricted shares of our common stock, all of which will vest on
May 7, 2012.
Why do we choose
to pay each element?
We strive to effectively utilize elements of compensation under
a total reward philosophy that combines annual and multi-year
reward opportunities. Our intent is to develop a compensation
program that rewards the annual accomplishment of the
companys goals and objectives while supporting our
long-term business strategy. We want to encourage our executives
to increase shareholder value.
9
How do we
determine the amount/formula for each element?
Executive compensation is reviewed annually, as follows:
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|
|
Compensation Committee Meeting
|
|
|
Held In:
|
|
Agenda
|
February
|
|
Compensation Committee reviews and approves the peer group
composition
|
May
|
|
Compensation Committee reviews market data, establishes equity
guidelines, reviews MIP design and establishes preliminary
company financial performance targets for the upcoming fiscal
year
|
June
|
|
Compensation Committee approves MIP design and company financial
performance targets for the upcoming fiscal year
|
August
|
|
Compensation Committee reviews performance for prior year and
approves merit increases, equity grants, and MIP payouts,
provided our full Board of Directors approves all compensation
actions for NEOs
|
|
|
|
Executive compensation is set at levels that the Compensation
Committee believes to be competitive with those offered by
employers of comparable size, growth and profitability in our
industry and industries in general. Annually, the Compensation
Committee reviews all elements of executive compensation,
individually and in the aggregate, against market data for
companies with which we compete for executive talent. The Hay
Group works with our internal human resources and benefits
professionals in conducting research and formulating
recommendations for the Compensation Committees
consideration to determine the levels and components of
compensation to be provided for the fiscal year. The Hay Group
also provides background material for consideration by the
Compensation Committee with respect to compensation for our CEO.
The Compensation Committee evaluates our executive compensation
based on competitive market information from:
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proxy data from a peer group of publicly-traded
companies with similar industry sector (business services) and
similar size (revenue, capitalization, number of
employees); and
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general survey data based on similar sized companies.
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Peer
Group Data
The various elements of our executive compensation program for
fiscal 2009 were benchmarked relative to the compensation
provided to executives of the following peer group:
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Apogee Enterprises, Inc.
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Bowne & Company
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Cintas Corporation
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Comfort Systems USA, Inc.
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Clean Harbors Environmental Services, Inc.
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Crawford & Company
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Deluxe Corporation
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Donaldson Company, Inc.
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Exterran Holdings, Inc.
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Invacare Corporation
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Kinetic Concepts, Inc.
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Mine Safety Appliances Company
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Paychex, Inc.
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Pentair, Inc.
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Polaris Industries Inc.
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Rollins, Inc.
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The Toro Company
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TrueBlue Inc.
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Varian Medical Systems, Inc.
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UniFirst Corporation
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We annually review the peer group to ensure an appropriate mix
of companies that are representative of the companies with which
we compete for talent. During fiscal 2009, we decided to broaden
our peer group to ensure that it includes appropriate service
industry comparisons and other companies with headquarters
located near our corporate headquarters. To that end, the
following companies were added to our peer group analysis: Clean
Harbors Environmental Services, Inc., Invacare Corporation,
Polaris Industries Inc., The Toro Company and Varian Medical
Systems, Inc.
General
Survey Data
We benchmark NEO compensation to survey data based on job
responsibility, generally using market median data from
companies with comparable revenue. We also benchmark plan
design, plan features, and participant eligibility as part of
the overall analysis process.
Market data is only one reference point in making compensation
decisions. We also consider the following key variables:
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size and scope of the position and level of responsibility;
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experience and capabilities of the NEO;
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the NEOs performance and potential;
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internal equity (pay of related positions on the team);
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unique market premiums for key positions;
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the NEOs compensation history; and
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10
Disparity
among NEOs
There are no policy differences with respect to the compensation
of individual NEOs. The compensation disparity between our
highest paid NEOs and other NEOs is due to the difference in
nature among the positions, market factors, and the terms, if
any, of the NEOs employment agreement.
How does each
element and our decision regarding that element fit into our
overall compensation objectives and affect decisions regarding
other elements?
In general, an NEOs compensation at target is weighted
more heavily on variable performance-based compensation than on
fixed base compensation. This pay mix supports the role of the
NEOs in enhancing value to shareholders over the long-term. The
variable pay components at target (annual and long-term
incentives) represented more than one-half of the total pay
opportunity for all NEOs, all of which are at risk. Through this
mix of pay, performance has a significant effect on the amount
of compensation realized by NEOs. In making actual individual
pay decisions, the Compensation Committee considers company
performance and individual NEO performance.
Tax
Considerations
Section 162(m) of the Internal Revenue Code limits the tax
deductibility of compensation in excess of $1 million paid
to our NEOs, unless the compensation constitutes qualified
performance-based compensation, as defined in
Section 162(m). While the Compensation Committee considers
the deductibility of compensation arrangements as an important
factor in compensation decisions for executives, deductibility
is not the sole factor used by the Compensation Committee in
ascertaining appropriate levels or modes of compensation. We
believe that to remain competitive, we must maintain a
compensation program that will continue to attract, retain, and
reward the executive talent necessary to maximize shareholder
return.
Compensation
Committee Report
The Compensation Committee of our Board of Directors has
furnished the following report:
The Compensation Committee has reviewed and discussed the
foregoing Compensation Discussion and Analysis with the
companys management. Based on that review and discussion,
the Compensation Committee has recommended to the companys
Board of Directors that the Compensation Discussion and Analysis
be included in the companys proxy statement for the 2009
annual meeting of shareholders.
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Wayne M. Fortun
J. Patrick Doyle
John S. Bronson
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The Compensation Committee Report set forth above will not be
deemed to be incorporated by reference into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that we specifically incorporate such
reports by reference, and such report will not otherwise be
deemed to be soliciting materials or to be filed under such
acts.
Fiscal
2009 Summary Compensation Table
The table below shows the compensation of our NEOs for services
in all capacities to the company in fiscal 2009, except as
otherwise indicated. This table also includes compensation
information for Mr. Marcantonio, our former Chairman and
Chief Executive Officer, and for David M. Miller, our former
President U.S. Rental Operations. For a discussion of the
amount of an NEOs salary and bonus in proportion to his
total compensation, see the Compensation Discussion and
Analysis on pages 4 to 11.
On May 7, 2009, we mutually agreed with Richard L.
Marcantonio to the termination of Mr. Marcantonios
employment with us, effective as of the close of business on
May 7, 2009. At the same time, Mr. Marcantonio
resigned from all his positions with us and our subsidiaries and
affiliates. In accordance with Mr. Marcantonios then
existing employment agreement, Mr. Marcantonio was eligible
for severance benefits (such benefits are subject to continued
compliance with the surviving terms and conditions of his
employment agreement and the separation agreement into which we
entered with Mr. Marcantonio). The cash value of such
benefits is described in footnote 3 to the All Other
Compensation table on page 13. In addition, in
accordance with the terms of his then existing employment
agreement, all unvested outstanding restricted stock and stock
options held by Mr. Marcantonio vested as of the close of
business on May 7, 2009, pursuant to the terms of each
grant or award and the plans under which they were made.
Payments due to Mr. Marcantonio under our Pension Plan,
SERP, DEFCO and 401(k) Plan will be paid in accordance with the
terms of each plan.
David Miller, our former President U.S. Rental Operation,
was employed with us through October 22, 2008. In
accordance with Mr. Millers then existing employment
agreement, Mr. Miller received certain severance benefits
which are described in footnote 3 to the All Other
Compensation table on page 13.
We believe that our compensation practices are fair and
reasonable. Our NEOs are not guaranteed salary increases or
bonus amounts. Pension benefits have been frozen and were
calculated on salary and bonus only; the proceeds earned on
equity or other equity-based performance awards were not part of
the pension calculation. We do not guarantee a return or provide
above-market returns on compensation that has been deferred. We
have not repriced stock options, and we do not grant reload
options. We believe our compensation program holds our NEOs
accountable for our financial and competitive performance and
for their individual contribution toward that performance, and
we do not believe that our compensation practices encourage
unnecessary risks.
11
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Change in
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Pension Value
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Restricted
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Non-Equity
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and Nonqualified
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Stock
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Stock
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Incentive
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Deferred
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All Other
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Salary
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Bonus
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Awards
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Options
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Compensation
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Compensation
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Compensation
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NEO
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Year
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($)(1)
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($)(2)
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($)(3)
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($)(4)
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($)(5)
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Earnings
($)(6)
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($)(7)
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Total ($)
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Douglas A. Milroy,
Chief Executive Officer
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2009
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348,821
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N/A
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125,528
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192,714
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100,000
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N/A
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(8)
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78,781
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845,844
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2008
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301,995
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45,000
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67,485
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100,587
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135,664
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N/A
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(8)
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54,108
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704,839
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2007
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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Jeffrey L. Wright,
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2009
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355,154
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N/A
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188,136
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184,496
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78,594
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15,178
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90,546
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912,104
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Executive Vice President and Chief
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2008
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341,348
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N/A
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146,829
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143,117
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265,594
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(9)
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87,286
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984,174
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Financial Officer
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2007
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312,404
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N/A
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113,898
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87,318
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115,349
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32,919
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86,471
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748,359
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Robert G. Wood,
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2009
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369,260
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N/A
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116,887
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163,433
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46,157
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N/A
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(10)
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59,483
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755,220
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President G&K
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2008
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423,207
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N/A
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99,923
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119,784
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154,607
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N/A
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91,251
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888,772
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Services Canada
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2007
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377,460
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N/A
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75,113
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73,963
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81,969
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N/A
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149,863
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758,368
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Timothy N. Curran,
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2009
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264,363
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N/A
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65,771
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51,814
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44,000
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4,667
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106,408
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537,023
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Senior Vice
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2008
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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President, U.S. Field
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2007
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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Jeffrey L. Cotter
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2009
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220,742
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N/A
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17,493
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15,214
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31,501
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N/A
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(8)
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20,608
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305,558
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Vice President, General Counsel and
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2008
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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Corporate Secretary
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2007
|
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N/A
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N/A
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N/A
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N/A
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N/A
|
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N/A
|
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N/A
|
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N/A
|
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Richard L. Marcantonio,
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2009
|
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709,519
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N/A
|
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1,014,349
|
|
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1,062,525
|
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49,906
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2,516,052
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5,352,351
|
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Departed Chairman
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2008
|
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696,369
|
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N/A
|
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|
|
459,213
|
|
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571,687
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766,662
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1,911
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(12)
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247,225
|
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2,743,067
|
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and CEO (11)
|
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2007
|
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666,346
|
|
|
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N/A
|
|
|
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249,101
|
|
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219,214
|
|
|
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366,201
|
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|
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74,845
|
|
|
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244,516
|
|
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1,820,223
|
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David M. Miller,
|
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2009
|
|
|
|
112,681
|
|
|
|
N/A
|
|
|
|
128,260
|
|
|
|
189,270
|
|
|
|
|
|
|
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2,729
|
|
|
|
370,767
|
|
|
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803,707
|
|
Departed President
|
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2008
|
|
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|
306,111
|
|
|
|
N/A
|
|
|
|
95,135
|
|
|
|
158,600
|
|
|
|
132,088
|
|
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(14)
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60,701
|
|
|
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752,635
|
|
US Rental Operations (13)
|
|
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2007
|
|
|
|
297,194
|
|
|
|
N/A
|
|
|
|
55,713
|
|
|
|
89,566
|
|
|
|
77,950
|
|
|
|
25,997
|
|
|
|
40,841
|
|
|
|
587,261
|
|
|
|
|
|
|
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(1)
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The annual base salary rate set by the Compensation Committee
for fiscal 2009 (effective September 1, 2008) for each
NEO was as follows: Mr. Milroy $318,206, adjusted to
$550,000 effective as of May 7, 2009; Mr. Wright:
$357,245; Mr. Wood: $427,137 CAD (in the table above,
Mr. Woods fiscal 2009 base salary has been converted
to USD using an average exchange rate for fiscal 2009 of
0.8645); Mr. Curran $275,000; Mr. Cotter $225,000;
Mr. Marcantonio: $725,000; and Mr. Miller: $315,352.
The annual base salary rate set by the Compensation Committee
for fiscal 2008 (effective September 1, 2007) for each
NEO was as follows: Mr. Marcantonio: $700,000; Mr. Wright:
$345,164; Mr. Miller: $307,661; Mr. Wood: $427,137 CAD
(in the table above, Mr. Woods fiscal 2008 base
salary was converted to USD in the table above using an average
exchange rate for fiscal 2008 of 0.9908); and Mr. Milroy:
$304,504. Messrs. Curran and Cotter were not executive
officers prior to the beginning of fiscal 2009; thus, their base
salaries were not determined by the Compensation Committee. The
annual base salary rate set by the Compensation Committee for
fiscal 2007 (effective September 1, 2006) for each NEO
was as follows: Mr. Marcantonio: $675,000; Mr. Wright:
$315,000; Mr. Miller: $298,700; Mr. Wood: $427,137 CAD
(in the table above, Mr. Woods fiscal 2007 base
salary was converted to USD in the table above using an average
exchange rate for fiscal 2007 of 0.8837).
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(2)
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Our MIP is performance-based. In accordance with SEC
requirements, these amounts are reported in the Non-Equity
Incentive Plan Compensation table and column. In fiscal 2008,
Mr. Milroy received a discretionary bonus equal to 15% of
his base salary, or $45,000, for his significant contributions
involving the implementation of SAP software into Lion Uniform
Group; the development of a revised plan for the introduction of
Dockers®
apparel in the company utilizing existing facilities; and for
playing a key advisory role on a key new project affecting the
companys service organization (the key new project was in
addition to his other assigned responsibilities).
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(3)
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Shown is the expense recognized in our financial statements for
fiscal years 2009, 2008 and 2007 under FAS 123(R) for all
restricted stock awards held by each NEO. This amount is
comprised of the fair market value of restricted stock granted
from July 2002 through June 2009, which were allocated to
service provided by the NEO during fiscal years 2007, 2008, and
2009. Accounting estimates of forfeitures are not included in
these figures. Mr. Miller forfeited 13,109 shares of
restricted stock in October 2009.
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(4)
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Shown is the expense recognized in our financial statements for
fiscal years 2009, 2008 and 2007 under FAS 123(R) for all
outstanding stock option awards held by each NEO. This amount is
comprised of the fair market value of stock options granted from
July 2004 through June 2009, which were allocated to service
provided by the NEO during fiscal years 2007, 2008 and 2009.
Accounting estimates of forfeitures are not included in these
figures. Assumptions used in the valuation of stock option
awards are set forth in Note 10 to our audited financial
statements for the year ended June 27, 2009.
Mr. Miller forfeited 47,829 options in October 2009.
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(5)
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Includes MIP performance amounts earned in fiscal years 2009,
2008 and 2007.
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(6)
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We do not pay above market earnings on deferred compensation.
Therefore, no amounts are reported in this column for deferred
compensation. For qualified and non-qualified plan benefits this
represents (i) the actuarial present value of the
accumulated benefit as of the last day of the fiscal year and
valued as of the last day of the fiscal year minus (ii) the
actuarial present value of the accumulated benefit as of first
day of the fiscal year and valued as of the first day of the
fiscal year. The benefits have been valued assuming benefits
commence at age 65 and using FAS 87 assumptions for
mortality, assumed payment form and discount rates in effect at
the measurement dates. Mr. Wood is not eligible to
participate in our Pension Plan, SERP, DEFCO, or 401(k) plan.
Instead, he participates in a Canadian pension program and a
retirement compensation arrangement.
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(7)
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The value of perquisites and other personal benefits is provided
in this column (see table below).
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(8)
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Messrs. Milroy and Cotter do not participate in our SERP or
our Pension Plan.
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(9)
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For fiscal year 2008, the change in value for Mr. Wright
was ($2,944) under our Pension Plan and ($13,741) under our SERP.
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(10) |
Mr. Wood is not covered by our U.S. qualified and
non-qualified retirement plans.
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(11 |
On May 7, 2009, we mutually agreed with Richard L.
Marcantonio to terminate Mr. Marcantonios employment
with us, effective as of the close of business on May 7,
2009.
|
|
|
(12) |
For fiscal year 2008, the change in value for
Mr. Marcantonio was $1,911 under our Pension Plan and
($20,345) under our SERP.
|
12
|
|
(13)
|
David M. Miller, our former President U.S. Rental Operations,
was employed with us through October 22, 2008.
|
|
(14)
|
For fiscal year 2008, the change in value for Mr. Miller
was ($2,328) under our SERP. Mr. Miller did not participate
in our Pension Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Planning
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Club
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
Severance
|
|
|
Dues
|
|
|
|
|
|
401(k)
|
|
|
DEFCO
|
|
|
Taxable
|
|
|
|
|
|
Executive
|
|
|
Total Other
|
|
NEO
|
|
Year
|
|
|
Gross-up
($)(1)
|
|
|
Loan
($)(2)
|
|
|
Payments
($)(3)
|
|
|
($)(4)
|
|
|
Car ($)(5)
|
|
|
Match
($)(6)
|
|
|
Match
($)(7)
|
|
|
Life
($)(8)
|
|
|
Pension
($)(9)
|
|
|
LTD
($)(10)
|
|
|
Compensation
|
|
Douglas A. Milroy
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,507
|
|
|
|
16,779
|
|
|
|
10,762
|
|
|
|
49,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,781
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,058
|
|
|
|
5,068
|
|
|
|
32,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,108
|
|
|
|
|
2007
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
Jeffrey L. Wright
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
443
|
|
|
|
18,268
|
|
|
|
9,917
|
|
|
|
61,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,546
|
|
|
|
|
2008
|
|
|
|
16,350
|
|
|
|
|
|
|
|
|
|
|
|
250
|
|
|
|
17,793
|
|
|
|
10,043
|
|
|
|
42,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,286
|
|
|
|
|
2007
|
|
|
|
22,763
|
|
|
|
|
|
|
|
|
|
|
|
9,988
|
|
|
|
17,132
|
|
|
|
7,173
|
|
|
|
29,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,471
|
|
Robert G. Wood
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,247
|
|
|
|
|
|
|
|
|
|
|
|
871
|
|
|
|
40,333
|
|
|
|
1,032
|
|
|
|
59,483
|
|
|
|
|
2008
|
|
|
|
21,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,969
|
|
|
|
|
|
|
|
|
|
|
|
1,040
|
|
|
|
41,250
|
|
|
|
1,183
|
|
|
|
91,251
|
|
|
|
|
2007
|
|
|
|
32,147
|
|
|
|
|
|
|
|
|
|
|
|
98
|
|
|
|
25,535
|
|
|
|
|
|
|
|
|
|
|
|
855
|
|
|
|
90,045
|
|
|
|
1,183
|
|
|
|
149,863
|
|
Timothy N. Curran
|
|
|
2009
|
|
|
|
26,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,511
|
|
|
|
10,562
|
|
|
|
23,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,408
|
|
|
|
|
2008
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
2007
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
Jeffrey L. Cotter
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
192
|
|
|
|
|
|
|
|
10,289
|
|
|
|
10,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,608
|
|
|
|
|
2008
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
2007
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
Richard L. Marcantonio
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
2,276,351
|
|
|
|
10,000
|
|
|
|
20,943
|
|
|
|
17,456
|
|
|
|
191,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,516,052
|
|
|
|
|
2008
|
|
|
|
32,113
|
|
|
|
40,000
|
|
|
|
|
|
|
|
5,000
|
|
|
|
22,777
|
|
|
|
13,153
|
|
|
|
134,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
247,225
|
|
|
|
|
2007
|
|
|
|
74,097
|
|
|
|
40,000
|
|
|
|
|
|
|
|
10,338
|
|
|
|
22,703
|
|
|
|
12,390
|
|
|
|
84,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
244,516
|
|
David M. Miller
|
|
|
2009
|
|
|
|
7,048
|
|
|
|
|
|
|
|
321,124
|
|
|
|
2,500
|
|
|
|
12,000
|
|
|
|
3,708
|
|
|
|
24,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
370,767
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,614
|
|
|
|
9,489
|
|
|
|
32,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,701
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
17,527
|
|
|
|
5,716
|
|
|
|
15,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For Mr. Marcantonio, this amount includes tax
gross-ups on
restricted stock granted in 2002 and 2003 and a
tax-gross-up
on the taxes due on the forgiven portion of his loan repayment
(final payment was made July 2007). For Mr. Wood, these
amounts include tax
gross-ups on
restricted stock granted in 2001. For Mr. Wright, these
amounts include tax
gross-ups on
restricted stock granted in 2000 and 2001. For Mr. Curran,
this amount includes $7,981 for tax
gross-ups on
the payment of relocation expenses and $18,599 for tax
gross-ups on
the companys purchase of his vehicle upon his promotion to
Senior Vice President, U.S. Field in October 2009. For
Mr. Miller, this amount represents the
gross-up on
the payment of the employer-paid portion of group health
benefits.
|
|
(2)
|
Includes final loan amount forgiven for Mr. Marcantonio.
|
|
(3)
|
Severance amounts for Mr. Marcantonio include
(i) $2,167, 750, of which $490,000 was paid in a lump sum
and the remainder will be paid in equal weekly installments for
12 months starting November 7, 2009, (ii) $60,417
paid in lieu of the company providing 30 days notice;
(iii) $11,084 for the employer-paid portion of group health
benefit costs, (iv) $25,000 for outplacement expenses and
(v) $12,100 payable on November 7, 2009, the six-month
anniversary of Mr. Marcantonios termination date.
Severance amounts for Mr. Miller include (i) $289,073,
payable in equal weekly installments of $6,046,
(ii) $10,301 for the employer-paid portion of group health
benefit costs, (iii) $12,000 for outplacement expenses and
(iv) $9,750 relating to his car allowance.
|
|
(4)
|
Includes monthly dues and expense for country club (which were
eliminated in fiscal year 2008) and fees paid by us on
behalf of the NEO for financial planning. In fiscal year 2008,
financial planning was capped at $5,000 per calendar year for
the Chairman and CEO and $2,500 per calendar year for the
remaining NEOs. The cap on financial planning was increased in
June 2008 to $7,500 per calendar year for the Chairman and CEO,
$5,000 per calendar year for the President, G&K Services
Canada, Executive Vice Presidents and Senior Vice Presidents and
$3,500 per calendar year for Vice Presidents. The amount
reflected for Mr. Marcantonio for fiscal 2009 includes a
portion paid in calendar 2008 and a portion paid in calendar
2009. The amount reflected for Mr. Wright in fiscal year
2007 includes $8,114 for country club dues and $1,874 for
financial planning. The amount reflected for
Mr. Marcantonio for fiscal year 2007 includes $3,438 for
country club dues and $6,900 for financial planning. All other
amounts are for financial planning only.
|
|
(5)
|
The amount was calculated based on the cost of the leased
vehicle to the company including lease, insurance, gas and
maintenance, plus the weekly car allowance, if applicable. The
amount reflected for Mr. Curran includes $16,298 for the
cost of the leased vehicle and weekly car allowance and $29,213
for the companys purchase of his vehicle upon his
promotion to Senior Vice President, U.S. Field in October 2009.
|
|
(6)
|
Includes company match on 401(k) and non-elective contributions.
|
|
(7)
|
Includes company match on DEFCO and non-elective contributions.
|
|
(8)
|
Includes fees paid by us for taxable life insurance.
|
|
(9)
|
Includes a one-time cash contribution of $75,000, a company
match to a Canadian retirement plan for Mr. Wood and
contributions by us to a Canadian retirement compensation
arrangement for Mr. Wood.
|
|
(10)
|
Includes fees paid by us for an executive long-term disability
plan for Mr. Wood.
|
13
Grants
of Plan-Based Awards in Fiscal 2009
The following table shows the grants of plan-based awards to the
NEOs in fiscal 2009. All awards identified by a grant date and
approval date reflect awards made under our 2006 Equity
Incentive Plan. Awards with no grant date or award date denoted
reflect awards under our MIP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Exercise
|
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
or Base
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
Estimated Future
|
|
|
Number of
|
|
|
Number
|
|
|
Price of
|
|
|
Stock and
|
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Payouts Under Equity
|
|
|
Shares of
|
|
|
of Shares
|
|
|
Option
|
|
|
Option
|
|
|
|
|
|
|
Approval
|
|
|
Plan Awards
($)(1)
|
|
|
Incentive Plan Awards
|
|
|
Stock or
|
|
|
of Stock
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Grant Date
|
|
|
Date
|
|
|
Minimum
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units(3)
|
|
|
or
Units(4)
|
|
|
($)(5)
|
|
|
($)(6)
|
|
|
|
Douglas A. Milroy
|
|
|
8/21/08
|
|
|
|
8/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,105
|
|
|
|
16,284
|
|
|
|
34.27
|
|
|
|
329,231
|
|
|
|
|
5/7/09
|
|
|
|
5/7/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
40,000
|
|
|
|
23.68
|
|
|
|
736,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412,500
|
(2)
|
|
|
825,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey L. Wright
|
|
|
8/21/08
|
|
|
|
8/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,165
|
|
|
|
13,779
|
|
|
|
34.27
|
|
|
|
278,555
|
|
|
|
|
5/7/09
|
|
|
|
5/7/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
23.68
|
|
|
|
355,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,485
|
|
|
|
392,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G. Wood
|
|
|
8/21/08
|
|
|
|
8/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,695
|
|
|
|
12,525
|
|
|
|
34.27
|
|
|
|
253,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,632
|
|
|
|
369,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy N. Curran
|
|
|
8/21/08
|
|
|
|
8/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,120
|
|
|
|
5,655
|
|
|
|
34.27
|
|
|
|
114,330
|
|
|
|
|
9/23/08
|
|
|
|
9/23/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
35.92
|
|
|
|
38,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
|
220,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey L. Cotter
|
|
|
8/21/08
|
|
|
|
8/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,490
|
|
|
|
3,972
|
|
|
|
34.27
|
|
|
|
80,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L. Marcantonio
|
|
|
8/21/08
|
|
|
|
8/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,600
|
|
|
|
54,300
|
|
|
|
34.27
|
|
|
|
953,686
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David M. Miller
|
|
|
8/21/08
|
|
|
|
8/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,995
|
|
|
|
10,647
|
|
|
|
34.27
|
|
|
|
215,377
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These columns reflect minimum, target, and maximum payouts under
our MIP for fiscal 2009. Mr. Woods target was
converted to USD using an exchange rate of 0.8645. The maximum
payouts for NEOs and other executives reporting to the CEO were
determined based on a formula for the financial measures as
follows: for each 5% above the EPS target, the payout factor
increased by 7.14% and for each 6.25% of company total revenue
above target, the payout factor increased by 12.5%. The actual
amount earned by each NEO is reported under the Non-Equity
Incentive Plan Compensation column in the Summary Compensation
table. Over the past three years, the payout percentage has
ranged from 0% to 146% of each executive participants
target award opportunity for these measures, with an average
payout percentage equal to approximately 70.5% of the target
award opportunity. MIP payouts are currently capped at 200% of
target.
|
|
(2)
|
Subject to the provisions of Section 162(m) of the Internal
Revenue Code, we may pay a portion of any incentive payments to
Mr. Milroy under the terms of our 2006 Equity Incentive
Plan.
|
|
(3)
|
The stock awards granted to NEOs in fiscal 2009 were restricted
stock awards. Each share of restricted stock represents the
right to receive a share of our common stock on the vesting
date. Restricted stock vests in five equal installments
beginning on the first anniversary of the grant date, except
that the grant of 15,000 restricted shares to Mr. Wright on
May 7, 2009 all vest on the third anniversary of the grant
date. Dividends are paid on these shares.
|
|
(4)
|
Each stock option granted to an NEO in fiscal 2009 represents
the right to purchase a share of our common stock at a specified
exercise price subject to the terms and conditions of the option
agreement. These options have a ten year term and vest and
become exercisable in three equal installments beginning on the
first anniversary of the grant date.
|
|
(5)
|
The exercise price is the fair market value of our common stock
on the day the option was granted. Fair market value is set
based on market close on the grant date.
|
|
(6)
|
This column represents the grant date fair value of each equity
award granted during fiscal 2009, which is calculated in
accordance with FAS 123(R). By contrast, the amount shown
for stock and option awards in the Summary Compensation Table is
the amount recognized by the company for financial statement
purposes in fiscal 2008 for awards granted in fiscal 2009 and
prior years to the NEOs. None of the options or other equity
awards granted to the NEOs was repriced or otherwise modified.
For information regarding our equity compensation grant
practices, see the Compensation Discussion and Analysis
on page 8.
|
14
Outstanding
Equity Awards at Fiscal Year-End 2009
The following table shows the outstanding equity awards for each
of the NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or Units
|
|
|
Shares or Units
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
of Stock that
|
|
|
of Stock That
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
|
Date(1)
|
|
|
Vested(2)
|
|
|
Vested($)(3)
|
|
Douglas A. Milroy
|
|
|
6,000
|
|
|
|
3,000
|
(4)
|
|
$
|
39.97
|
|
|
|
11/20/2016
|
|
|
|
33,017
|
|
|
|
735,619
|
|
|
|
|
2,128
|
|
|
|
4,256
|
(5)
|
|
$
|
39.82
|
|
|
|
08/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
$
|
41.17
|
|
|
|
11/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,284
|
(7)
|
|
$
|
34.27
|
|
|
|
08/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(8)
|
|
$
|
23.68
|
|
|
|
05/07/2019
|
|
|
|
|
|
|
|
|
|
Jeffrey L. Wright
|
|
|
1,540
|
|
|
|
|
|
|
$
|
41.56
|
|
|
|
09/01/2009
|
|
|
|
31,198
|
|
|
|
695,091
|
|
|
|
|
2,639
|
|
|
|
|
|
|
$
|
28.50
|
|
|
|
09/01/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
3,220
|
|
|
|
|
|
|
$
|
27.95
|
|
|
|
09/01/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
35.69
|
|
|
|
01/02/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
10,002
|
|
|
|
|
|
|
$
|
32.57
|
|
|
|
08/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
5,700
|
|
|
|
|
|
|
$
|
36.41
|
|
|
|
08/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
9,501
|
|
|
|
|
|
|
$
|
42.97
|
|
|
|
09/01/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
8,080
|
|
|
|
4,040
|
(9)
|
|
$
|
33.11
|
|
|
|
09/01/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
2,313
|
|
|
|
4,626
|
(5)
|
|
$
|
39.82
|
|
|
|
08/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
$
|
41.17
|
|
|
|
11/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,779
|
(7)
|
|
$
|
34.27
|
|
|
|
08/21/2018
|
|
|
|
|
|
|
|
|
|
Robert G. Wood
|
|
|
1,560
|
|
|
|
|
|
|
$
|
41.56
|
|
|
|
09/01/2009
|
|
|
|
12,355
|
|
|
|
275,269
|
|
|
|
|
6,000
|
|
|
|
|
|
|
$
|
35.69
|
|
|
|
01/02/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
|
|
|
$
|
32.57
|
|
|
|
08/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
7,300
|
|
|
|
|
|
|
$
|
36.41
|
|
|
|
08/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
6,150
|
|
|
|
|
|
|
$
|
42.97
|
|
|
|
09/01/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
1,350
|
|
|
|
|
|
|
$
|
39.09
|
|
|
|
02/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
5,154
|
|
|
|
2,577
|
(9)
|
|
$
|
33.11
|
|
|
|
09/01/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
1,758
|
|
|
|
3,516
|
(5)
|
|
$
|
39.82
|
|
|
|
08/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
$
|
41.17
|
|
|
|
11/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,525
|
(7)
|
|
$
|
34.27
|
|
|
|
08/21/2018
|
|
|
|
|
|
|
|
|
|
Timothy N. Curran
|
|
|
3,000
|
|
|
|
|
|
|
$
|
39.19
|
|
|
|
01/26/2014
|
|
|
|
6,713
|
|
|
|
149,566
|
|
|
|
|
4,000
|
|
|
|
|
|
|
$
|
36.41
|
|
|
|
08/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
4,002
|
|
|
|
|
|
|
$
|
42.97
|
|
|
|
09/01/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
3,654
|
|
|
|
1,827
|
(9)
|
|
$
|
33.11
|
|
|
|
09/01/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
1,002
|
|
|
|
2,004
|
(5)
|
|
$
|
39.82
|
|
|
|
08/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,655
|
(7)
|
|
$
|
34.27
|
|
|
|
08/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(10)
|
|
$
|
35.92
|
|
|
|
09/23/2018
|
|
|
|
|
|
|
|
|
|
Jeffrey L. Cotter
|
|
|
1,000
|
|
|
|
|
|
|
$
|
39.44
|
|
|
|
02/03/2016
|
|
|
|
2,376
|
|
|
|
52,937
|
|
|
|
|
328
|
|
|
|
164
|
(9)
|
|
$
|
33.11
|
|
|
|
09/01/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
159
|
|
|
|
318
|
(5)
|
|
$
|
39.82
|
|
|
|
08/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,972
|
(7)
|
|
$
|
34.27
|
|
|
|
08/21/2018
|
|
|
|
|
|
|
|
|
|
Richard L. Marcantonio
|
|
|
100,000
|
|
|
|
|
|
|
$
|
31.32
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
35.69
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
17,220
|
|
|
|
|
|
|
$
|
32.57
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
14,640
|
|
|
|
|
|
|
$
|
36.41
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
21,000
|
|
|
|
|
|
|
$
|
42.97
|
|
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
26,001
|
|
|
|
|
|
|
$
|
33.11
|
|
|
|
09/01/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
33,000
|
|
|
|
|
|
|
$
|
39.82
|
|
|
|
08/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
$
|
41.17
|
|
|
|
11/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
54,300
|
|
|
|
|
|
|
$
|
34.27
|
|
|
|
08/21/2018
|
|
|
|
|
|
|
|
|
|
David M. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
For each option shown, the expiration date is the tenth
anniversary of the date the option was granted, except for those
options referenced in footnote 6.
|
15
|
|
(2) |
The following table indicates the dates when the shares of
restricted stock held by each NEO vest and are no longer subject
to forfeiture:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Date
|
|
Douglas A. Milroy
|
|
Jeffrey L. Wright
|
|
Robert G. Wood
|
|
Timothy N. Curran
|
|
Jeffrey L. Cotter
|
08/21/2009
|
|
|
1,221
|
|
|
|
1,033
|
|
|
|
939
|
|
|
|
424
|
|
|
|
298
|
|
08/23/2009
|
|
|
1,278
|
|
|
|
1,389
|
|
|
|
1,056
|
|
|
|
603
|
|
|
|
184
|
|
08/31/2009
|
|
|
|
|
|
|
390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/01/2009
|
|
|
|
|
|
|
1,907
|
|
|
|
1,222
|
|
|
|
816
|
|
|
|
50
|
|
11/20/2009
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/22/2010
|
|
|
|
|
|
|
|
|
|
|
90
|
|
|
|
|
|
|
|
|
|
05/07/2010
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
08/21/2010
|
|
|
1,221
|
|
|
|
1,033
|
|
|
|
939
|
|
|
|
424
|
|
|
|
298
|
|
08/23/2010
|
|
|
1,278
|
|
|
|
1,389
|
|
|
|
1,056
|
|
|
|
603
|
|
|
|
184
|
|
09/01/2010
|
|
|
|
|
|
|
1,907
|
|
|
|
1,222
|
|
|
|
816
|
|
|
|
50
|
|
11/20/2010
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/22/2011
|
|
|
|
|
|
|
|
|
|
|
90
|
|
|
|
|
|
|
|
|
|
05/07/2011
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
08/21/2011
|
|
|
1,221
|
|
|
|
1,033
|
|
|
|
939
|
|
|
|
424
|
|
|
|
298
|
|
08/23/2011
|
|
|
1,278
|
|
|
|
1,389
|
|
|
|
1,056
|
|
|
|
603
|
|
|
|
184
|
|
09/01/2011
|
|
|
|
|
|
|
1,273
|
|
|
|
812
|
|
|
|
549
|
|
|
|
50
|
|
11/20/2011
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/07/2012
|
|
|
4,000
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
08/21/2012
|
|
|
1,221
|
|
|
|
1,033
|
|
|
|
939
|
|
|
|
424
|
|
|
|
298
|
|
08/23/2012
|
|
|
1,278
|
|
|
|
1,389
|
|
|
|
1,056
|
|
|
|
603
|
|
|
|
184
|
|
05/07/2013
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
08/21/2013
|
|
|
1,221
|
|
|
|
1,033
|
|
|
|
939
|
|
|
|
424
|
|
|
|
298
|
|
05/07/2014
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
33,017
|
|
|
|
31,198
|
|
|
|
12,355
|
|
|
|
6,713
|
|
|
|
2,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
Calculated by multiplying the
number of restricted shares by $22.28, the closing price of our
common stock on June 26, 2009, the last business day of the
fiscal year. Dividends are paid on these shares.
|
|
(4)
|
These options continue to vest and
the remaining shares become exercisable on November 20,
2009, assuming continued employment.
|
|
(5)
|
These options continue to vest and
the remaining shares become exercisable in two equal
installments on August 23, 2009 and August 23, 2010,
assuming continued employment.
|
|
(6)
|
These options cliff vest and become
exercisable on November 15, 2010, assuming continued
employment.
|
|
(7)
|
These options continue to vest and
the remaining shares become exercisable in three equal
installments on August 21, 2009, 2010, and 2011, assuming
continued employment.
|
|
(8)
|
These options continue to vest and
the remaining shares become exercisable in three equal
installments on May 7, 2010, 2011, and 2012, assuming
continued employment.
|
|
(9)
|
These options continue to vest and
the remaining shares become exercisable on September 1,
2009, assuming continued employment.
|
|
|
(10)
|
These options continue to vest and
the remaining shares become exercisable in three equal
installments on September 23, 2009, 2010, and 2011,
assuming continued employment.
|
Fiscal
2009 Option Exercises and Stock Vested
The following table lists the number of shares acquired and the
value realized as a result of option exercises by the NEOs in
fiscal 2009 and the value of any restricted stock units that
vested in fiscal 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
Stock Awards
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
Name
|
|
Exercise
|
|
|
Exercise ($)
|
|
|
Acquired on Vesting
|
|
|
Vesting
($)(1)
|
|
Douglas A. Milroy
|
|
|
|
|
|
|
|
|
|
|
1,878
|
|
|
|
56,510
|
|
Jeffrey L. Wright
|
|
|
|
|
|
|
|
|
|
|
3,686
|
|
|
|
127,977
|
|
Robert G. Wood
|
|
|
|
|
|
|
|
|
|
|
2,278
|
|
|
|
79,212
|
|
Timothy N. Curran
|
|
|
|
|
|
|
|
|
|
|
1,419
|
|
|
|
49,309
|
|
Jeffrey L. Cotter
|
|
|
|
|
|
|
|
|
|
|
234
|
|
|
|
8,183
|
|
Richard L. Marcantonio
|
|
|
|
|
|
|
|
|
|
|
41,152
|
|
|
|
1,053,394
|
|
David M. Miller
|
|
|
|
|
|
|
|
|
|
|
1,686
|
|
|
|
58,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Calculated by multiplying the
closing price on the date of vesting times the number of shares.
|
16
Fiscal
2009 Pension Benefits
The following table shows the present value as of June 30,
2009 of the benefit of the NEOs under our qualified and
nonqualified defined benefit pension plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years of
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Credited
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Plan at FAS
|
|
|
Present Value of
|
|
|
Payments During
|
|
|
|
|
|
|
Measurement Date
|
|
|
Accumulated Benefit
|
|
|
Last Fiscal Year
|
|
Name
|
|
Plan Name
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas A. Milroy
|
|
|
G&K Services Pension Plan
|
|
|
|
|
(1)
|
|
|
|
(1)
|
|
|
|
(1)
|
|
|
|
G&K Services SERP
|
|
|
|
|
(1)
|
|
|
|
(1)
|
|
|
|
(1)
|
Jeffrey L. Wright
|
|
|
G&K Services Pension Plan
|
|
|
|
8.00
|
|
|
$
|
47,230
|
|
|
$
|
0
|
|
|
|
|
G&K Services SERP
|
|
|
|
8.00
|
|
|
$
|
111,463
|
|
|
$
|
0
|
|
Robert G. Wood
|
|
|
G&K Services Pension Plan
|
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
G&K Services SERP
|
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
Timothy N. Curran
|
|
|
G&K Services Pension Plan
|
|
|
|
3.00
|
|
|
$
|
20,433
|
|
|
$
|
0
|
|
|
|
|
G&K Services SERP
|
|
|
|
3.00
|
|
|
$
|
31,123
|
|
|
$
|
0
|
|
Jeffrey L. Cotter
|
|
|
G&K Services Pension Plan
|
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
G&K Services SERP
|
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
David M. Miller
|
|
|
G&K Services Pension Plan
|
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
G&K Services SERP
|
|
|
|
1.00
|
|
|
$
|
28,447
|
|
|
$
|
0
|
|
Richard L. Marcantonio
|
|
|
G&K Services Pension Plan
|
|
|
|
5.00
|
|
|
$
|
71,741
|
|
|
$
|
0
|
|
|
|
|
G&K Services SERP
|
|
|
|
5.00
|
|
|
$
|
533,278
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Milroy does not
participate in our Pension Plan or our SERP.
|
|
(2)
|
Mr. Wood is not covered by our
U.S. qualified and non-qualified retirement plans.
|
|
(3)
|
Mr. Cotter does not
participate in our Pension Plan or our SERP.
|
|
(4)
|
Mr. Miller did not participate
in our Pension Plan.
|
G&K
Services Pension Plan
Our NEOs (with the exception of Messrs. Milroy, Wood, and
Cotter) participate in our Pension Plan. Effective
December 31, 2006, benefits under this plan were frozen,
meaning the accrual of future benefits under the plan was
discontinued. Benefits are the greater of the amounts determined
under the 1989 pension formula or, if the participant is
eligible, under the 1988 pension formula.
The 1989 pension formula is 2/3rds of 1% of participants
average compensation plus one-half of 1% of average compensation
in excess of covered compensation, multiplied by benefit accrual
service at December 31, 2006 (or termination, if earlier),
not to exceed 30.
The 1988 pension formula:
|
|
|
Eligibility if a participant had an accrued benefit
under the Pension Plan as of December 31, 1988, and the
participant was not a Highly Compensated Employee
during the 1989 plan year, the participant is eligible to
continue to earn benefits under the 1988 pension formula until
the earliest of December 31, 2006, termination, or the end
of the year preceding the plan year in which the participant
became a Highly Compensated Employee.
|
|
|
Formula 50% of the participants average
compensation, less 75% of the estimated primary social security
benefit, multiplied by years of benefit accrual service at
December 31, 2006 (or termination, if earlier), not to
exceed 30, divided by 30.
|
Compensation generally means wages, salaries, and other amounts
earned for services provided to us, including, among other
items, commissions, incentives, bonuses, and pre-tax
contributions to the 401(k) plan. Compensation excludes, among
other items, deferrals to deferred compensation plans, amounts
realized from restricted stock, stock options, and fringe
benefits. Average compensation is the average of the five
highest consecutive years of compensation out of the ten
consecutive years preceding December 31, 2006 (or
termination, if earlier). Covered compensation is the average of
social security taxable wage bases for the
35-year
period ending with the participants social security
retirement age. An employee attains normal retirement age on the
later of the date he or she attains age 65 or the fourth
anniversary of the first day of the plan year in which the
employee became a participant in the plan. A participant is
vested after completing five years of vesting service and is
then eligible for vested termination benefits. A vested
terminated participant is eligible to commence benefits as early
as age 55, in which case, benefits are reduced 6
2/3%
for each of the first five years commencement precedes normal
retirement age and 3
1/3%
for each year thereafter. A participant is eligible for
subsidized early retirement benefits if termination occurs after
age 60 with at least 30 years of benefit accrual
service, in which case, benefits are reduced 3% for each year
commencement precedes normal retirement age.
None of the NEOs are currently eligible for subsidized early
retirement benefits.
The normal payment form is the life only annuity. A variety of
other
17
payment forms are available, all equivalent in value if paid
over an average lifetime.
The present value of benefits shown in the Pension Benefits
Table and the Change in Pension Value and Nonqualified Deferred
Compensation Earnings column of the Summary Compensation Table
is the discounted value of the life only benefit to commence at
age 65. The present values were determined using
assumptions consistent with those used for our Pension Plan
financial reporting purposes under SFAS 87 unless otherwise
directed by SEC
Regulation S-K.
Some of those assumptions are as follows:
|
|
|
benefits were assumed to commence at age 65;
|
|
|
the assumed form of payment was the life only payment form;
|
|
|
all values were determined as of June 30, 2007, 2008 or
2009 as appropriate;
|
|
|
the discount rate used to determine values was 6.40%, 7.20% and
6.9% as of June 30, 2007, 2008 and 2009,
respectively; and
|
|
|
no pre-retirement mortality, retirement, withdrawal or
disability was assumed.
|
Mr. Wood, a Canadian citizen, is not covered by our US
pension and SERP plans. Mr. Wood is covered by a defined
contribution plan pursuant to which we contribute 2% of his base
salary and match his contributions of up to 6% of base salary.
The Canadian government sets a limit for total contributions,
which for 2009 is $21,000 CAD, to be inflation adjusted each
year. If this limit is reached, Mr. Wood is covered by a
retirement compensation arrangement, or RCA. Under the RCA, we
continue to contribute an amount equal to 2% of
Mr. Woods salary and match Mr. Woods
contributions of up to 6% of base pay. One-half of the money
contributed to the RCA is held by a trustee and is invested in
widely available mutual funds. The other one-half is held by the
Canadian government as a refundable tax. One-half of all
earnings on funds invested by the trustee is also paid to the
Canadian government and is also held as a refundable tax.
SERP
The NEOs (with the exception of Messrs. Milroy, Wood,
Curran and Cotter) participate in our SERP. Effective
December 31, 2006, benefits under the plan were frozen,
meaning the accrual of future benefits under the plan was
discontinued.
Benefits under the plan are determined as 50% of average
compensation, multiplied by the ratio of benefit accrual service
at December 31, 2006 (or termination, if earlier), divided
by projected benefit accrual service to age 60 (no less
than 30) determined as of December 31, 2006. If, at
December 31, 2006, the participant was at least
age 60, then the ratio is benefit accrual service at
December 31, 2006 (or termination, if earlier), not to
exceed 30, divided by 30.
Compensation is generally equal to the compensation used for
purposes of our Pension Plan, but also includes any deferrals
the participant made to a deferred compensation plan sponsored
by the company. Average compensation is the average of the five
highest consecutive years of compensation out of the ten
consecutive years preceding December 31, 2006 (or
termination, if earlier). An employee attains normal retirement
age on the date he or she attains age 65. A participant is
vested after completing five years of participation service. A
vested terminated participant is eligible to commence benefits
as early as age 55. A participant is eligible for early
retirement benefits if termination occurs after attainment of
age 55 and the participant is vested. In either case, the
benefit determined for commencement prior to age 65 is the
age 65 benefit, before reduction for our Pension Plan
benefit offset, reduced 3
1/3%
for each of the first five years commencement precedes
age 65 and 6
2/3%
for each year thereafter. This is also reduced by our Pension
Plan benefit as reduced for commencement under the terms of that
plan as of the same date.
The normal payment form is the life only annuity. A variety of
other payment forms are available, all equivalent in value if
paid over an average lifetime. Distributions are subject to
compliance with Section 409A of the Internal Revenue Code.
The SERP contains a non-compete provision. If the participant
enters into competition with the company during the three year
period following termination of employment, benefits under the
SERP are forfeited. This provision is waived for participants
working with the company beyond age 65.
The present value of benefits shown in the Pension Benefits
Table and the Change in Pension Value and Nonqualified Deferred
Compensation Earnings column of the Summary Compensation Table
is the discounted value of the life only benefit to commence at
age 65. The present values were determined using
assumptions consistent with those used for our SERP financial
reporting purposes under SFAS 87 unless otherwise directed
by SEC
Regulation S-K.
Some of those assumptions are as follows:
|
|
|
benefits were assumed to commence at age 65;
|
|
|
the assumed form of payment was the life only payment form;
|
|
|
all values were determined as of June 30, 2007, 2008 or
2009 as appropriate;
|
|
|
the discount rate used to determine values was 6.30%, 7.05% and
6.9% as of June 30, 2007, 2008 and 2009,
respectively; and
|
|
|
no pre-retirement mortality, retirement, withdrawal or
disability was assumed.
|
DEFCO
Our DEFCO is a non-qualified plan that provides our executives
and NEOs with the opportunity to defer up to 25 percent of
base salary and 50 percent of incentive compensation.
Participants deferred cash accounts earn a monthly rate of
return which tracks the investment return achieved under certain
participant-selected investment funds. Participants are eligible
to change their investment mix at any time. We credit deferred
accounts with additional amounts equal to the value of the
matching contributions. At the time of the initial deferral
election, participants must also select a distribution date (no
later than age 65) and form of payment for normal
retirement. Participants may elect to receive distributions in a
single payment or installments.
18
The following table shows contributions to the NEOs
deferred compensation account in fiscal 2009 and the aggregate
amount of deferred compensation as of June 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Aggregate Earnings
|
|
|
Withdrawals/
|
|
|
Aggregate Balance
|
|
Name
|
|
Last FY
($)(1)
|
|
|
Last FY
($)(2)
|
|
|
in Last FY
($)(3)
|
|
|
Distributions ($)
|
|
|
($)
|
|
Douglas A. Milroy
|
|
|
176,357
|
|
|
|
49,733
|
|
|
|
(84,481
|
)
|
|
|
|
|
|
|
330,977
|
|
Jeffrey L. Wright
|
|
|
62,051
|
|
|
|
61,918
|
|
|
|
(169,166
|
)
|
|
|
|
|
|
|
523,942
|
|
Robert G. Wood
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
Timothy N. Curran
|
|
|
29,471
|
|
|
|
23,755
|
|
|
|
(39,879
|
)
|
|
|
|
|
|
|
198,449
|
|
Jeffrey L. Cotter
|
|
|
2,163
|
|
|
|
10,127
|
|
|
|
(238
|
)
|
|
|
|
|
|
|
14,519
|
|
Richard L. Marcantonio
|
|
|
263,963
|
|
|
|
191,302
|
|
|
|
(351,157
|
)
|
|
|
(151,836
|
)
|
|
|
896,432
|
(4)
|
David M. Miller
|
|
|
23,855
|
|
|
|
24,387
|
|
|
|
(45,016
|
)
|
|
|
(62,123
|
)
|
|
|
17,503
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts in this column reflect salary deferrals by the NEO in
fiscal year 2009. These amounts are also included in the
Salary column of the Summary Compensation Table. We
match 50% of the NEOs deferral election up to 10% of both
base salary and incentive pay (amounts deferred above 10% are
not matched). We make company retirement contributions equal to
2.5% of each NEOs cash compensation, including pay that
exceeds the IRS compensation limit to the NEOs DEFCO
account. If an NEOs pay exceeds the IRS compensation
limit, we will also make a company retirement contribution equal
to 4% of the NEOs cash compensation over the IRS
compensation limit.
|
|
(2)
|
Amounts in this column represent contributions made by us during
fiscal year 2009. These amounts are also reflected in the
All Other Compensation that is reported in the
Summary Compensation Table.
|
|
(3)
|
The amounts in this column are not included in the Summary
Compensation Table because they are not above-market or
preferential earnings on deferred compensation. Earnings are
based on indices of widely available mutual funds.
|
|
(4)
|
Excludes amounts forfeited by the executive upon termination.
|
Potential
Post-Employment Payments
Severance
Pursuant to the terms of existing employment agreements, we are
required to make certain payments and to extend certain benefits
to Messrs. Milroy, Wright, Wood and Curran in the event of
any termination of any such employment agreements with each
executive or the executives employment thereunder.
Specifically, in the event that an executives employment
under the agreement is terminated by us without cause, we must
provide to such executive the following benefits:
|
|
|
we must provide the executive with 30 days written notice
of termination;
|
|
|
|
if the executive signs and does not revoke a release, we must
pay to such executive, as separation pay, an amount equal to
11 months of such executives monthly base salary in
effect as of the actual date of termination (or, in the case of
Mr. Milroy, an amount equal to 1.99 times his annual base
salary in effect as of the actual date of termination), such
separation pay being made in weekly payments, subject to the
terms of such release; some payment may be subject to a delay of
six months to comply with tax code section 409A;
|
|
|
|
if such executive (or any individual receiving group health plan
benefits through him) is eligible under applicable law to
continue participation in our group health plan and elects to do
so, we will, for a period of up to 17 months commencing as
of the actual date of termination, continue to pay our share of
the cost of such benefits as if such executive remained in our
continuous employment, but only while such executive or such
person is not eligible for coverage under any other
employers group health plan;
|
|
|
we will, for a period of at least one year commencing as of the
actual date of termination, pay directly to the service provider
or reimburse such executive for all reasonable expenses of a
reputable outplacement organization selected by such executive,
such payments not to exceed $12,000 in the aggregate;
|
|
|
we will pay a lump sum payment equal to six times the monthly
automobile allowance, if applicable; and
|
|
|
we will pay to such executive any unpaid management incentive
bonus earned by such executive and to which such executive is
entitled (provided such executive was employed by us as of the
last day of the fiscal year prior to the actual date of
termination), such payment being made in accordance with the
terms of the related plan.
|
In the event an executive voluntarily resigns or an
executives employment is terminated for cause or by reason
of death, such executive is only entitled to his base salary
through the date of termination or death, plus any other earned
but unpaid amounts under his employment agreement or any benefit
plan. At then end of this section is a table indicating the
estimated incremental amounts we would owe to each of our NEOs
upon such NEOs termination for cause.
No executive is required to seek other employment. Any
executives commencement of employment with another
employer will not reduce our obligations to make severance
payments.
Change
in Control
Following is a discussion of the potential payments under
current programs to Messrs. Milroy, Wright, Wood and Curran
in the event of a change in control of the company, followed by
a Change in Control Termination. At the end of this
section is a table indicating the estimated incremental amounts
that would have been triggered for each such executive had there
been a Change in Control Termination as of June 27, 2009.
The employment agreements address termination due to change in
control and for good reason, and provide as follows:
A Change in Control occurs when:
|
|
|
anyone attains control of 30% of our voting stock;
|
19
|
|
|
challengers replace a majority of our Board of Directors within
two years; or
|
|
|
a merger or consolidation with, or disposal of all or
substantially all of our assets to, someone other than the
company.
|
A Change in Control Termination occurs when a Change
in Control has taken place and the executive then is terminated
within one year of the change in control either by the employer
for any reason other than for cause, or by the executive for
good reason. Good reason is defined following a Change in
Control to include the following:
|
|
|
a substantial adverse involuntary change in the executives
status or position as an executive with the company;
|
|
|
a material reduction by the company in the executives base
salary as in effect on the day before the Change in Control;
|
|
|
material adverse change in physical working conditions,
interfering with the executives work;
|
|
|
a requirement to relocate, other than on intermittent basis,
more than 35 miles from corporate headquarters as a
condition of employment;
|
|
|
failure by the company to obtain from any successor an
assumption of the executives employment agreement;
|
|
|
attempted termination other than pursuant to the
executives employment agreement; or
|
|
|
any material breach of the executives employment agreement.
|
In the event of a change in control of the company and the
related termination of an executives employment by such
executive for good reason or by us for any reason or for no
reason other than for cause, in each case, prior to the first
anniversary of the change in control (the following description
is qualified in its entirety by reference to the respective
employment agreements of the executives):
|
|
|
we must provide the executive with 30 days written notice
of termination;
|
|
|
we will pay the executive an amount equal to 17 months of
such executives base salary (or, in the case of
Mr. Milroy, an amount equal to 1.99 times his annual base
salary), subject to certain limitations;
|
|
|
if such executive (or any individual receiving group health plan
benefits through him) is eligible to continue participation in
our group health plan and elects to do so, we must, for a period
of up to 17 months, continue to pay the employers
share of the cost of such benefits as if such executive remained
in our continuous employment, subject to certain limitations;
|
|
|
we will, for a period of at least one year, pay directly or
reimburse such NEO for all reasonable outplacement expenses,
such payments not to exceed $12,000;
|
|
|
we will pay the executive the amount necessary to acquire and
obtain full title to any personal automobile leased by us for
the executive or, if the executive does not have the use of a
personal automobile but has been given an automobile allowance,
we will pay the executive a lump sum payment equal to three
times the annual automobile allowance such executive is then
receiving;
|
|
|
we will pay for financial planning and tax preparation expenses,
not to exceed $5,000 (or in the case of Mr. Milroy,
$7,500), subject to increase by our Board of Directors, for
17 months; and
|
|
|
we will pay any management incentive bonus earned by the
executive and to which the executive is entitled (provided the
executive was employed by us as of the last day of the fiscal
year prior to the actual date of termination), such payment
being made in accordance with the terms of the related plan.
|
In addition, upon the occurrence of a change in control, and
without regard to an executives employment status, but
presuming that the executive remains in our employ on the date
of the change in control, the following shall occur with respect
to any and all economic incentives, including, without
limitation, stock options and awards of restricted stock that
are owned by such executive on the date of the change in control:
|
|
|
the restrictions on any previously issued shares of restricted
stock will immediately lapse;
|
|
|
all outstanding options and stock appreciation rights will
become immediately exercisable; and
|
|
|
all performance criteria for all performance shares will be
deemed to be met and immediate payment made.
|
If any benefits payable would be an excess parachute payment,
then payments and benefits will be reduced to the minimum extent
necessary so that no portion of any such payment or benefit, as
so reduced, constitutes an excess parachute payment, provided
that such reduction will be made only if and to the extent that
that such reduction would result in an increase in the aggregate
payment and benefits provided on an after-tax basis, taking into
account any excise tax imposed by Internal Revenue Code
Section 4999.
Disability
During any period in which any such executive is
disabled, the executive will continue to receive all
base salary, benefits, and other compensation.
Disability means the unwillingness or inability of
the executive to perform the essential functions of the
executives position (with or without reasonable
accommodation) for a period of 90 days (consecutive or
otherwise) within any period of six consecutive months. If this
occurs, we will issue a Notice of Termination, and if the
executive has not returned to the full-time performance of
his/her
duties within 30 days, the thirtieth day after Notice of
Termination will be the executives date of termination.
Post-Employment
Payment Tables
The tables below provide the estimated amounts, other than
equity acceleration that may apply under the terms of the
applicable plan and which is described below, that would have
been triggered for each NEO below had there been a termination
under the various scenarios described above as of June 27,
2009:
20
Douglas
A. Milroy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Us
|
|
|
Change of Control
|
|
|
|
|
Payment Type
|
|
Without Cause ($)
|
|
|
Termination ($)
|
|
|
Disability ($)
|
|
Severance
|
|
|
1,094,500
|
(1)
|
|
|
1,094,500
|
(1)
|
|
|
320,833
|
(2)
|
Health Benefits
|
|
|
10,468
|
(3)
|
|
|
10,468
|
(3)
|
|
|
4,310
|
(4)
|
Outplacement(5)
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
|
|
Car
|
|
|
12,100
|
(6)
|
|
|
72,600
|
(7)
|
|
|
14,166
|
(8)
|
Financial
Planning(9)
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
|
|
Deferred Compensation
|
|
|
278,087
|
(10)
|
|
|
330,977
|
(11)
|
|
|
278,087
|
(10)
|
Total
|
|
|
1,414,655
|
|
|
|
1,528,045
|
|
|
|
617,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects 1.99 times base salary.
|
|
(2)
|
Reflects seven months of base salary (one month for the notice
period plus six months pay).
|
|
(3)
|
Reflects 17 months of health benefits.
|
|
(4)
|
Reflects seven months of medical and dental benefits (one month
for the notice period plus six months pay).
|
|
(5)
|
Outplacement is capped at $12,000.
|
|
(6)
|
Reflects six times the monthly car allowance at an annual rate
of $24,200.
|
|
(7)
|
Reflects three times the annual car allowance at an annual rate
of $24,200.
|
|
(8)
|
Reflects seven months of car expense.
|
|
(9)
|
Financial planning is capped at $7,500.
|
|
(10)
|
Includes $255,420 of Mr. Milroys contribution account
and $22,667 of the companys contribution account.
|
|
(11)
|
Includes $255,420 of Mr. Milroys contribution account
and $75,557 of the companys contribution account. Pursuant
to the DEFCO, acceleration of vesting would require acquisition
by a third party of 50% of our stock, rather than the 30%
threshold stated in Mr. Milroys employment agreement.
Mr. Milroys DEFCO account will become fully vested
upon a change in control.
|
Jeffrey
L. Wright
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Us
|
|
|
Change of Control
|
|
|
|
|
Payment Type
|
|
Without Cause ($)
|
|
|
Termination ($)
|
|
|
Disability ($)
|
|
Severance
|
|
|
327,475
|
(1)
|
|
|
506,097
|
(2)
|
|
|
208,393
|
(3)
|
Health Benefits
|
|
|
10,680
|
(4)
|
|
|
10,680
|
(4)
|
|
|
4,398
|
(5)
|
Outplacement(6)
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
|
|
Car
|
|
|
9,750
|
(7)
|
|
|
58,500
|
(8)
|
|
|
11,375
|
(9)
|
Financial
Planning(10)
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
Deferred
Compensation(11)
|
|
|
523,942
|
|
|
|
523,942
|
|
|
|
523,942
|
|
Total
|
|
|
888,847
|
|
|
|
1,116,219
|
|
|
|
748,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects 11 months of base salary
|
|
(2)
|
Reflects 17 months of base salary.
|
|
(3)
|
Reflects seven months of base salary (one month for the notice
period plus 6 months pay).
|
|
(4)
|
Reflects 17 months of health benefits.
|
|
(5)
|
Reflects seven months of medical and dental benefits (one month
for the notice period plus six months pay).
|
|
(6)
|
Outplacement is capped at $12,000.
|
|
(7)
|
Reflects six times the monthly car allowance rate at an annual
rate of $19,500.
|
|
(8)
|
Reflects three times the annual car allowance at an annual rate
of $19,500.
|
|
(9)
|
Reflects seven months of car expense.
|
|
(10)
|
Financial planning is capped at $5,000.
|
|
(11)
|
Includes $321,308 of Mr. Wrights contribution account
and $202,634 of the company contribution account.
Mr. Wrights DEFCO account is fully vested.
|
Robert
G. Wood
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Us
|
|
|
Change of Control
|
|
|
|
|
Payment Type
|
|
Without Cause ($)
|
|
|
Termination ($)
|
|
|
Disability ($)
|
|
Severance
|
|
|
338,488
|
(1)
|
|
|
523,118
|
(2)
|
|
|
215,402
|
(3)
|
Health Benefits
|
|
|
2,182
|
(4)
|
|
|
2,182
|
(4)
|
|
|
898
|
(5)
|
Outplacement(6)
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
|
|
Car
|
|
|
9,293
|
(7)
|
|
|
55,760(8
|
)
|
|
|
10,842(9
|
)
|
Financial
Planning(10)
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
Deferred
Compensation(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
366,963
|
|
|
|
598,060
|
|
|
|
227,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects 11 months of base salary.
|
|
(2)
|
Reflects 17 months of base salary.
|
|
(3)
|
Reflects seven months of base salary (one month for the notice
period plus six months pay).
|
21
|
|
(4)
|
Reflects 17 months of health benefits.
|
|
(5)
|
Reflects seven months of medical and dental benefits (one month
for the notice period plus six months pay).
|
|
(6)
|
Outplacement is capped at $12,000.
|
|
(7)
|
Reflects six times the monthly car allowance at an annual rate
of $21,500 CAD (converted to US dollars using an exchange rate
of 0.8645).
|
|
(8)
|
Reflects three times the annual car allowance at an annual rate
of $21,500 CAD (converted to US dollars using an exchange rate
of 0.8645).
|
|
(9)
|
Reflects seven months of car expense.
|
|
(10)
|
Financial planning is capped at $5,000.
|
|
(11)
|
Mr. Wood is not covered by the DEFCO.
|
Timothy
N. Curran
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Us
|
|
|
Change of Control
|
|
|
|
|
Payment Type
|
|
Without Cause ($)
|
|
|
Termination ($)
|
|
|
Disability ($)
|
|
Severance
|
|
|
252,083
|
(1)
|
|
|
389,583
|
(2)
|
|
|
160,416
|
(3)
|
Health Benefits
|
|
|
10,468
|
(4)
|
|
|
10,468
|
(4)
|
|
|
4,310
|
(5)
|
Outplacement(6)
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
|
|
Car
|
|
|
9,750
|
(7)
|
|
|
58,500(8
|
)
|
|
|
11,375(9
|
)
|
Financial
Planning(10)
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
Deferred Compensation
|
|
|
159,212
|
(11)
|
|
|
198,450
|
(12)
|
|
|
159,212
|
(11)
|
Total
|
|
|
448,513
|
|
|
|
674,001
|
|
|
|
335,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects 11 months of base salary
|
|
(2)
|
Reflects 17 months of base salary.
|
|
(3)
|
Reflects seven months of base salary (one month for the notice
period plus six months pay).
|
|
(4)
|
Reflects 17 months of health benefits.
|
|
(5)
|
Reflects seven months of medical and dental benefits (one month
for the notice period plus six months pay).
|
|
(6)
|
Outplacement is capped at $12,000.
|
|
(7)
|
Reflects six times the monthly car allowance at an annual rate
of $19,500.
|
|
(8)
|
Reflects three times the annual car allowance at an annual rate
of $19,500.
|
|
(9)
|
Reflects seven months of car expense.
|
|
(10)
|
Financial planning is capped at $5,000.
|
|
(11)
|
Includes $119,974 of Mr. Currans contribution account
and $39,238 of the company contribution account.
|
|
(12)
|
Includes $119,974 of Mr. Currans contribution account
and $78,476 of the company contribution account. Pursuant to the
DEFCO, acceleration of vesting would require acquisition by a
third party of 50% of our stock, rather than the 30% threshold
stated in Mr. Currans employment agreement.
Mr. Currans DEFCO account will become fully vested
upon a change of control.
|
We have not entered into an employment agreement with
Mr. Cotter; however, if Mr. Cotter experiences a
change in control termination, which termination requires thirty
days notice from the company, he would be entitled to certain
benefits under our Change in Control Policy applicable to Vice
Presidents. Specifically, he would be entitled to severance pay
of $93,750, or five months of his base salary.
Our outstanding equity awards to our NEOs will accelerate on a
change of control. Had a change of control occurred on
June 27, 2009, the value of the acceleration on such date
with respect to stock options would be zero because the exercise
price of the options was in excess of the market value. The
value with respect to the acceleration of vesting on the
restricted stock on that date is disclosed in the Market
Value of Shares or Units of Stock that have Not Vested in
the Outstanding Equity Awards at Fiscal Year-End 2009 table on
page 15.
Compensation
Paid to Board Members
During fiscal 2009, we paid each director who was not otherwise
employed by us an annual fee of $32,000, along with a $2,000 fee
for each meeting of the Board of Directors attended in person
($500 for those attended telephonically), and $1,000 for each
committee meeting of the Board of Directors attended in person
($500 for those attended telephonically). We also paid a $20,000
retainer to the Presiding Director, a $10,000 retainer to the
Chair of the Audit Committee, and a $5,000 retainer to the
Chairs of the Compensation and Corporate Governance Committees.
In June 2009, the Compensation Committee also approved an annual
retainer for the Chairman of the Board of $80,000, which amount
is to be paid in five equal installments and is intended to
compensate our Chairman of the Board for additional duties.
Except for the fee for the Chairman of the Board, we did not
increase fees paid to our non-employee directors in fiscal 2009.
In addition, directors who are not otherwise employed by the
company are eligible to participate in the 2006 Equity Incentive
Plan. For fiscal 2009, directors were granted 2,400 shares
at an option exercise price equal to the market closing price on
the date of grant. Each option has a
10-year term
and becomes exercisable on the first anniversary of the grant
date. On June 24, 2009, in connection with his appointment
as Chairman of the Board, we granted Mr. Pippin an option
to purchase 3,600 shares of our common stock at an exercise
price equal to the closing price on the date of grant. This
option has a ten-year term and becomes exercisable on
June 24, 2010. Each new director receives a one-time grant
of options to purchase 3,000 shares of common stock upon
his or her initial election to the Board of Directors. Each of
the 3,000 share options has a
10-year term
and vests in three equal installments beginning on the first
anniversary of the grant date. Non-employee directors also
receive an annual stock grant; in fiscal 2009, this annual stock
grant was 1,200 shares of common stock on the first
business day of the calendar year.
Each director who is not an employee of the company is eligible
to participate in our Amended and Restated Director Deferred
Compensation Plan, under which the non-employee director may
elect to defer all or part of his or her Board of Director fees
and annual stock grants until the earlier of a specific date
identified by the non-employee director or the termination of
his or her services as a member of the board for any reason. The
amount of any cash compensation deferred by a non-employee
director is converted into a number of stock units, determined
based upon the average of the
22
closing prices of our common stock on the NASDAQ Global Select
Market during the ten business days preceding the relevant
valuation date, and is credited to a deferred compensation
account maintained in his or her name. Deferred stock grants are
converted on a
share-for-share
basis on the date of deferral and also credited to the
non-employee directors account. The account will be
credited with additional stock units, also based on such average
market value, upon payment date for any dividends declared on
our common stock. At the end of the deferral period, the amounts
accumulated in the deferred compensation account will be
distributed in the form of common stock under the 2006 Equity
Incentive Plan equal to the number of whole stock units in the
account and cash in lieu of any fractional shares (based on such
average market value as of the distribution date).
Non-employee directors are not eligible to participate in any
company-sponsored pension plan.
We also have in place stock ownership requirements for our
non-employee directors. Specifically, each of our directors is
required to own a minimum number of shares equal to three times
the directors annual base retainer. Once achieved, each
director must maintain this ownership level at all times during
the directors tenure with the company.
Director
Summary Compensation Table
The following table shows the compensation of the companys
non-employee directors for services in all capacities to us in
fiscal 2009, except as otherwise indicated.
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|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Value and Deferred
|
|
|
|
|
|
|
|
|
|
Fees Earned or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name
|
|
in Cash
(1) ($)
|
|
|
Awards
(2) ($)
|
|
|
Awards
(3) ($)
|
|
|
Compensation ($)
|
|
|
Earnings ($)
|
|
|
Compensation ($)
|
|
|
Total ($)
|
|
Paul Baszucki
|
|
|
52,000
|
|
|
|
24,252
|
|
|
|
18,192
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
94,444
|
|
John S. Bronson
|
|
|
58,500
|
|
|
|
24,252
|
|
|
|
18,192
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
100,944
|
|
J. Patrick Doyle
|
|
|
53,000
|
|
|
|
24,252
|
|
|
|
18,192
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
95,444
|
|
Wayne M. Fortun
|
|
|
59,500
|
|
|
|
24,252
|
|
|
|
18,192
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
101,944
|
|
Ernest Mrozek
|
|
|
53,500
|
|
|
|
24,252
|
|
|
|
18,192
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
95,944
|
|
M. Lenny Pippin
|
|
|
86,000
|
|
|
|
24,252
|
|
|
|
19,812
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
130,064
|
|
Alice M. Richter
|
|
|
64,000
|
|
|
|
24,252
|
|
|
|
18,192
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
106,444
|
|
Lynn Crump-Caine
|
|
|
55,000
|
|
|
|
24,252
|
|
|
|
15,038
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
94,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes amounts deferred at the directors election. As
discussed above, directors can elect to defer all or part of
their compensation. See discussion above under the
section titled Compensation Paid to Board Members.
|
|
(2)
|
Shown is the expense, which is immediately recognized, in our
financial statements for fiscal 2009 under FAS 123(R) for
1,200 shares of stock awarded to each director on
January 2, 2009. The per share grant date fair value under
FAS 123(R) for stock awarded to each director on
January 2, 2009 was $20.21. Accounting estimates of
forfeitures are not included in these figures.
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|
(3)
|
The FAS 123(R) expense shown above was recognized in our
fiscal year 2009 financial statements and is related stock
option grants that occurred in fiscal year 2008 and 2009.
Accounting estimates of forfeitures are not included in these
figures. On January 2, 2009, each director received an
annual grant of 2,400 options with a fair value of $4.79 per
option. On June 24, 2009, Mr. Pippin was awarded an
additional grant of 3,600 options with a fair value of $5.40 per
option in recognition of his new position as Chairman.
Assumptions used in the valuation of stock option and stock
awards are set forth in Note 10 to our audited financial
statements for the year ended June 27, 2009.
|
23
PROPOSAL NUMBER 2:
To
Ratify the Appointment of Independent Auditors
Our Board of Directors and management are committed to the
quality, integrity and transparency of the companys
financial reports. Independent auditors play an important part
in our system of financial control. In accordance with the
duties set forth in its written charter, the Audit Committee of
our Board of Directors has appointed Ernst & Young LLP
as our independent auditors for the 2010 fiscal year. A
representative of Ernst & Young LLP will attend this
years annual meeting and will be available to respond to
appropriate questions from shareholders, and also will have the
opportunity to make a statement if he or she desires to do so.
If the shareholders do not ratify the appointment of
Ernst & Young LLP, the Audit Committee may reconsider
its selection, but is not required to do so. Notwithstanding the
proposed ratification of the appointment of Ernst &
Young LLP by the shareholders, the Audit Committee, in its
discretion, may direct the appointment of new independent
auditors at any time during the year without notice to, or the
consent of, the shareholders, if the Audit Committee determines
that such a change would be in our best interests.
Fees
Billed to Company by Auditors:
Set forth below are the fees billed by Ernst & Young
LLP for the fiscal years ended June 27, 2009 and
June 28, 2008:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
June 27, 2009
|
|
|
June 28, 2008
|
|
Audit
Fees(1)
|
|
$
|
753,789
|
|
|
$
|
671,085
|
|
Audit-Related
Fees(2)
|
|
|
9,173
|
|
|
|
9,500
|
|
Tax
Fees(3)
|
|
|
209,446
|
|
|
|
217,406
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
972,408
|
|
|
$
|
897,991
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents amounts related to the audit of our annual
consolidated financial statements and the review of our
consolidated financial statements included in our quarterly
reports on
Form 10-Q.
For fiscal years 2009 and 2008, this amount also includes fees
for an internal control review pursuant to Section 404 of
the Sarbanes- Oxley Act.
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|
(2)
|
Represents amounts reasonably related to the performance of the
audit or review of our consolidated financial statements which
are not reported under the Audit Fees category.
|
|
(3)
|
Represents fees related to tax compliance and tax planning
services.
|
The Audit Committee of our Board of Directors has reviewed the
services described in footnotes (2) and (3) above
provided by Ernst & Young LLP as well as the amounts
billed for such services, and after consideration has determined
that the receipt of these fees by Ernst & Young LLP is
compatible with the provision of independent audit services. The
Audit Committee has discussed these services and fees with
Ernst & Young LLP and management to determine that
they are appropriate under applicable rules and regulations.
Pre-Approval
Policy
All services performed by Ernst & Young LLP have been
pre-approved in accordance with the Audit Committee charter. The
charter provides that all audit and non-audit accounting
services that are permitted to be performed by our independent
accountant under applicable rules and regulations must be
pre-approved by the Audit Committee or by designated independent
members of the Audit Committee, other than with respect to
de minimus exceptions permitted under Section 202 of
the Sarbanes-Oxley Act.
Prior to or as soon as practicable following the beginning of
each fiscal year, a description of audit, audit-related, tax,
and other services expected to be performed by Ernst &
Young LLP in the following fiscal year is presented to the Audit
Committee for approval. Following such approval, any requests
for audit, audit-related, tax, and other services not presented
and pre-approved must be submitted to the Audit Committee for
specific pre-approval and cannot commence until such approval
has been granted. Normally, pre-approval is provided at
regularly scheduled meetings. However, the authority to grant
specific pre-approval between meetings, as necessary, may be
delegated to one or more members of the Audit Committee who are
independent directors. In the event such authority is so
delegated, the full Audit Committee must be updated at the next
regularly scheduled meeting with respect to any services that
were granted specific pre-approval by delegation. During the
fiscal year 2009 the Audit Committee has functioned in
conformance with these procedures.
GOVERNANCE
OF THE COMPANY
Board
of Directors and Committees
Board
of Directors
Our Board of Directors held ten meetings during fiscal 2009, six
of which were held in person, and four of which were conducted
by telephone. We have established certain committees of our
Board of Directors, as follows: an Audit Committee, a
Compensation Committee and a Corporate Governance Committee. No
director attended fewer than 75% of the aggregate number of
meetings of the Board of Directors and the committees of the
board on which such director served during the 2009 fiscal year.
On August 25, 2005, the Board of Directors created the
position of Presiding Director and elected Mr. M. Lenny
Pippin to serve in that capacity. Chosen from among the
boards independent directors, the Presiding
Directors primary responsibility is to ensure that the
board functions independently of management and that proper
communication is maintained among management and the
boards independent directors. On May 7, 2009,
Mr. Pippin was appointed Chairman of the Board. As
Chairman, Mr. Pippins primary responsibilities
include managing the board, facilitating communication among
directors and between the board and management, leading CEO
succession planning, leading the board self-evaluation process
and assisting in shareholder relations.
Director
Attendance at Annual Meetings of Shareholders
We do not have a formal policy with respect to attendance by
board members at the annual meeting of shareholders, but all
directors are encouraged to attend, and we attempt to coordinate
scheduling of our annual meeting of shareholders to accommodate
attendance by directors. All of our directors attended our
fiscal 2008 annual meeting of shareholders.
Independence
With the exception of Messrs. Milroy and Wright, all of the
members of our Board of Directors are independent within the
meaning of applicable NASDAQ Global Select Market and SEC rules.
When considering the independence of directors, the Board of
Directors determined that Mr. Doyles position as
President of Dominos Pizza U.S.A., which is a
24
customer of the company, did not impair the independence of
Mr. Doyle. All of the transactions with Dominos Pizza
U.S.A. were conducted on arms length terms in the ordinary
course of business, and the amount involved with the
transactions represent less than one percent of the revenues of
Dominos Pizza U.S.A.
Corporate
Governance Committee
We have established a Corporate Governance Committee of the
Board of Directors comprised solely of independent
directors (as defined by applicable rules and regulations
of the Securities Exchange Commission, NASDAQ Global Select
Market and other relevant regulatory bodies), one of whom also
serves on the Compensation Committee of the board. The primary
roles of the Corporate Governance Committee are to monitor the
effectiveness of the board in carrying out certain
responsibilities, to assure appropriate board composition, to
select a Chief Executive Officer and review annually the
performance of the companys Chief Executive Officer and
the operation of the full Board of Directors (including its
Chairman and its various committees) and to assure that
succession plans for senior management are developed and
implemented. In addition, the Corporate Governance Committee
presents qualified director candidates to the full board and
considers qualified nominees recommended by shareholders.
The Corporate Governance Committee, which presently consists of
Chair M. Lenny Pippin, Messrs. Baszucki and Bronson, held
five meetings during fiscal 2009, four of which were held in
person and one of which was conducted by telephone, and did not
take action by written consent. Our Board of Directors has
adopted a written charter for the Corporate Governance
Committee, a copy of which is available at our website at
http://www.gkservices.com.
The Corporate Governance Committee has one member in common with
the Compensation Committee. The Chair and members of the
Corporate Governance Committee are appointed by the Board of
Directors at the annual organizational meeting of the board.
Audit
Committee
We have established an Audit Committee of the Board of Directors
which assists the Board of Directors in fulfilling certain
oversight responsibilities and consists solely of independent
directors. The Audit Committee operates pursuant to a written
charter adopted by the Board of Directors, a copy of which is
available at our website at
http://www.gkservices.com.
As set forth in the charter, the primary responsibilities of the
Audit Committee include serving as an independent and objective
party to monitor our financial reporting process and internal
control system; reviewing and appraising the audit results of
our independent auditors and internal audit department; and
providing an open avenue of communication among the independent
auditors, financial and senior management, the internal audit
department, and our Board of Directors. The charter also
requires that the Audit Committee appoint our independent
auditors and review and pre-approve the performance of all audit
and non-audit accounting services to be performed by our
independent auditors, other than services falling within the
de minimus exceptions permitted under Section 202 of
the Sarbanes-Oxley Act.
The Audit Committee, which presently consists of Chair Alice M.
Richter, Ms. Crump-Caine and Mr. Mrozek held 13
meetings during fiscal 2009, four of which were held in person
and nine of which were conducted by telephone, and did not take
action by written consent. The Audit Committee met and held
discussions with financial management and representatives from
Ernst & Young LLP prior to the public release of
earnings information for each of our completed fiscal periods,
and prior to each quarterly report on
Form 10-Q
and annual report on
Form 10-K
being filed with the Securities and Exchange Commission.
Our Board of Directors has determined that two members of the
Audit Committee, specifically Ms. Richter and
Mr. Mrozek, are Audit Committee Financial
Experts as that term is defined in Item 407(d)(5) of
Regulation S-K
promulgated under the Securities Exchange Act of 1934, as
amended. In addition, each member of the Audit Committee is an
independent director, as such term is defined in
Rule 5605(a)(2) of the NASDAQ Global Select Markets
listing standards, and meets the criteria for independence set
forth in Rule 5605(c)(2) of the NASDAQ Global Select
Markets listing standards and
Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934, as amended. Our Board
of Directors has also determined that each of the Audit
Committee members is able to read and understand fundamental
financial statements and that at least one member of the Audit
Committee has past employment experience in finance or
accounting.
Compensation
Committee
The Compensation Committee of the Board of Directors, which
presently consists of Chair Wayne M. Fortun and
Messrs. Bronson and Doyle, held nine meetings during fiscal
2009, five of which were held in person and four of which were
conducted by telephone, and did not take action by written
consent. All members of the Compensation Committee are
independent directors within the meaning of the
NASDAQ Global Select Markets Rule 5605(a)(2) and
non-employee directors within the meaning of
Rule 16b-3(b)(3)
under the Securities Exchange Act of 1934, as amended. The
Compensation Committee reviews our remuneration policies and
practices and makes recommendations to our board in connection
with all compensation matters affecting our executive officers.
Our Board of Directors has adopted a written charter for the
Compensation Committee, a copy of which is available at our
website at
http://www.gkservices.com.
Ability
of Shareholders to Communicate with the Companys Board of
Directors
We have established means for shareholders and others to
communicate with our Board of Directors. If a shareholder wishes
to address a matter regarding our financial statements,
accounting practices or internal controls, the matter should be
submitted in writing addressed to the Chair of the Audit
Committee in care of the Corporate Secretary at our headquarters
address. If the matter relates to our governance practices,
business ethics or corporate conduct, it should be submitted in
writing addressed to the Chair of the Corporate Governance
Committee in care of the Corporate Secretary at our headquarters
address. If the matter relates to our compensation practices, it
should be submitted in writing addressed to the Chair of the
Compensation Committee in care of the Corporate Secretary at our
headquarters address. If a shareholder is unsure where to direct
a communication, the shareholder may direct it in writing to the
Chairman of the
25
Board of Directors, or to any one of the independent directors
of the company, in care of the Corporate Secretary at our
headquarters address. As appropriate, these shareholder
communications will be forwarded by the Corporate Secretary to
the appropriate addressee.
Report
of the Audit Committee
The Audit Committee has reviewed our audited consolidated
financial statements for the last fiscal year, and has discussed
them with management and the independent registered public
accounting firm.
Specifically, the Audit Committee has discussed with
Ernst & Young LLP the matters required to be discussed
by statement on Auditing Standards No. 61, as amended
(AICPA, Professional Standards, Vol. 1. AU
section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T.
The Audit Committee has received and reviewed the written
disclosures and the letter from the independent registered
public accounting firm required by the applicable requirements
of the Public Company Accounting Oversight Board regarding the
independent accountants communication with the audit
committee concerning independence, and has discussed with the
independent accountant the independent accountants
independence, including a consideration of the compatibility of
non-audit services with such independence.
The Audit Committee, based on the review and discussions
described above with management and Ernst & Young LLP,
has recommended to our Board of Directors, which adopted this
recommendation, that the audited consolidated financial
statements be included in our annual report on
Form 10-K
for the fiscal 2009 for filing with the Securities and Exchange
Commission.
As reported:
Alice M. Richter
Lynn Crump-Caine
Ernest J. Mrozek
The Audit Committee Report set forth above will not be deemed
to be incorporated by reference into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that we specifically incorporate such
reports by reference, and such report will not otherwise be
deemed to be soliciting materials or to be filed under such
acts.
Compensation
Committee Interlocks and Insider Participation
No member of our Compensation Committee was during fiscal 2009
an officer, former officer or employee of the company or any of
its subsidiaries. During fiscal 2009, none of our executive
officers served as a member of (i) the compensation
committee of another entity, one of whose executive officers
served on the compensation committee of our Board of Directors,
(ii) the board of directors of another entity, one of whose
executive officers served on the Compensation Committee of our
Board of Directors, or (iii) the compensation committee (or
other board committee performing equivalent functions, or in the
absence of any such committee, the entire board of directors) of
another entity, one of whose executive officers served as a
member of our Board of Directors.
Consideration
of Director Candidates
The Corporate Governance Committee, together with the Chairman
of the Board of Directors and other directors, recruits director
candidates and presents qualified candidates to the full Board
of Directors for consideration. At each annual
shareholders meeting, the Board of Directors proposes to
the shareholders a slate of nominees for election or re-election
to the board. Shareholders may propose director nominees for
consideration by the Corporate Governance Committee by
submitting a recommendation in writing to the Chair of the
Corporate Governance Committee, in care of our Corporate
Secretary at our headquarters address. We use third party search
firms to locate and evaluate qualified candidates.
Qualified director candidates, whether identified by
shareholders or otherwise, will be considered without regard to
race, color, religion, sex, ancestry, national origin or
disability. The Corporate Governance Committee will consider
each candidates general business and industry experience,
his or her ability to act on behalf of shareholders, overall
board diversity, potential concerns regarding independence or
conflicts of interest and other factors relevant in evaluating
board nominees. If the Corporate Governance Committee approves a
candidate for further review following an initial screening, the
Corporate Governance Committee will establish an interview
process for the candidate. Generally, the candidate will meet
with at least a majority of the members of the Corporate
Governance Committee, along with the Chairman of the Board of
Directors and our CEO. Contemporaneously with the interview
process, the Corporate Governance Committee will conduct a
comprehensive
conflicts-of-interest
assessment of the candidate. The Corporate Governance Committee
will consider reports of the interviews and the
conflicts-of-interest
assessment to determine whether to recommend the candidate to
the full Board of Directors. The Corporate Governance Committee
will also take into consideration the candidates personal
attributes, including personal integrity, and concern for the
companys success and welfare, willingness to apply sound
and independent business judgment, awareness of a
directors vital part in the companys good corporate
citizenship and image, time available for meetings and
consultation on company matters, and willingness to assume
broad, fiduciary responsibility.
Shareholders who wish to nominate a candidate for election to
the Board of Directors at the annual meeting must comply with
our advance notice bylaw described elsewhere in this proxy
statement.
Code
of Business Conduct and Ethics
We have adopted a Code of Conduct for our Board of Directors and
a Code of Ethical Conduct for Senior Executives and Financial
Managers. The latter of these codes, as applied to our principal
financial officers, constitutes our code of ethics
within the meaning of Section 406 of the Sarbanes-Oxley
Act. These codes are posted on our website at
http://www.gkservices.com.
We will promptly disclose on our website amendments to certain
provisions of these codes, and any waivers of provisions of
these codes required to be disclosed under the rules of the SEC
or the NASDAQ Global Select Market.
26
Voting
Securities and Principal Holders Thereof
The following table sets forth, as of September 18, 2009,
the record date for the annual meeting, certain information with
regard to the beneficial ownership of our common stock and the
voting power resulting from the ownership of such stock by
(i) all persons known by us to be the owner, of record or
beneficially, of more than 5% of our outstanding common stock,
(ii) each of our directors and each of the nominees for
election to our Board of Directors, (iii) each NEO, and
(iv) all executive officers and directors as a group,
without regard to whether such persons are also reporting
persons for purposes of Section 16(a) of the Securities
Exchange Act of 1934, as amended. Unless otherwise indicated,
the address of each of the following persons is 5995 Opus
Parkway, Minnetonka, Minnesota 55343.
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock
|
|
|
|
Number of
|
|
|
Percent
|
|
Name of Beneficial Owner(1)
|
|
Shares
|
|
|
of Class
|
|
Marcantonio, Richard
L.(2)
|
|
|
387,179
|
|
|
|
2.09
|
%
|
Wright, Jeffrey
L.(3)
|
|
|
122,325
|
|
|
|
|
*
|
Milroy, Douglas
A.(4)
|
|
|
79,179
|
|
|
|
|
*
|
Wood, Robert
G.(5)
|
|
|
72,250
|
|
|
|
|
*
|
Curran, Timothy
N.(6)
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|
|
36,969
|
|
|
|
|
*
|
Fortun, Wayne
M.(7)
|
|
|
25,135
|
|
|
|
|
*
|
Baszucki,
Paul(8)
|
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21,400
|
|
|
|
|
*
|
Miller, David
M.(9)
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|
16,544
|
|
|
|
|
*
|
Bronson, John
S.(10)
|
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|
15,400
|
|
|
|
|
*
|
Richter, Alice
M.(11)
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|
14,900
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|
|
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*
|
Pippin, M.
Lenny(12)
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|
13,500
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|
|
|
|
*
|
Doyle, J.
Patrick(13)
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13,400
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|
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*
|
Mrozek, Ernest
J.(14)
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13,400
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*
|
Cotter, Jeffrey
L.(15)
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9,605
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*
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Crump-Caine,
Lynn(16)
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2,200
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*
|
All executive officers and directors as a group
(15 persons)(17)
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843,386
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4.56
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%
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|
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T. Rowe Price Associates,
Inc.(18)
100 East Pratt Street
Baltimore, MD 21202
|
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1,883,470
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10.18
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%
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|
|
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Dimensional Fund Advisors, Inc.
(18)
1299 Ocean Avenue 11th Floor
Santa Monica, CA 90401
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1,694,456
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|
|
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9.16
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%
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|
|
|
|
|
|
|
|
Barclays Global Investors
NA(18)
45 Fremont Street
San Francisco, CA 94105
|
|
|
1,331,979
|
|
|
|
7.20
|
%
|
|
|
|
* |
Indicates an amount less than 1%.
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(1)
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Unless otherwise noted, each person or group identified
possesses sole voting and investment power with respect to the
shares shown opposite the name of such person or group.
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(2)
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Indicates holdings as of June 17, 2009. Includes
336,161 shares subject to stock options that are
exercisable within the next 60 days.
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|
(3)
|
Includes 62,401 shares subject to stock options that are
exercisable within the next 60 days and 37,994 shares
of unvested restricted stock.
|
|
(4)
|
Includes 15,684 shares subject to stock options that are
exercisable within the next 60 days and 55,518 shares
of unvested restricted stock.
|
|
(5)
|
Includes 42,222 shares subject to stock options that are
exercisable within the next 60 days and 17,307 shares
of unvested restricted stock.
|
|
(6)
|
Includes 22,039 shares subject to stock options that are
exercisable within the next 60 days and 12,010 shares
of unvested restricted stock.
|
|
(7)
|
Includes 12,300 shares subject to stock options that are
exercisable within the next 60 days.
|
|
(8)
|
Includes 12,300 shares subject to stock options that are
exercisable within the next 60 days.
|
|
(9)
|
Indicates holdings as of July 23, 2009.
|
|
|
(10)
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Includes 10,300 shares subject to stock options that are
exercisable within the next 60 days.
|
|
(11)
|
Includes 10,300 shares subject to stock options that are
exercisable within the next 60 days.
|
|
(12)
|
Includes 12,300 shares subject to stock options that are
exercisable within the next 60 days.
|
|
(13)
|
Includes 9,300 shares subject to stock options that are
exercisable within the next 60 days.
|
|
(14)
|
Includes 9,300 shares subject to stock options that are
exercisable within the next 60 days.
|
|
(15)
|
Includes 3,134 shares subject to stock options that are
exercisable within the next 60 days and 5,909 shares
of unvested restricted stock.
|
|
(16)
|
Includes 1,000 shares subject to stock options that are
exercisable within the next 60 days.
|
|
(17)
|
Includes 558,741 shares subject to stock options that are
exercisable within the next 60 days and 245,658 shares
of unvested restricted stock.
|
|
(18)
|
Based solely upon the most recent report filed with the
Securities and Exchange Commission pursuant to
Rule 13f-1
of the Securities Exchange Act of 1934, as amended.
|
The foregoing footnotes are provided for informational purposes
only and each person disclaims beneficial ownership of shares
owned by any member of his or her family, or held in trust for
any other person, including family members, or held by a family
limited partnership or foundation.
27
Certain
Transactions
Our board reviews and approves any transactions with related
parties in which the related person has or will have a material
direct or indirect interest. Our boards related review and
approval policies are not in writing, but in conducting such
reviews and approving such transactions, among other things, our
board considers the type of transaction proposed, appropriate
regulatory requirements, the monetary value of the transaction,
the nature of the goods
and/or
services involved and whether the transaction may influence the
related persons ability to exercise independent business
judgment when conducting the companys business and affairs.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers and
directors, and persons who own more than 10% of a registered
class of our equity securities, to file reports of ownership and
changes in ownership with the SEC and the NASDAQ Global Select
Market. Officers, directors and greater than 10% shareholders
are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file.
Based solely on our review of the copies of such forms furnished
to the company, or written representations that no Forms 5
were required, we believe that during fiscal 2009, our officers,
directors and greater than 10% beneficial owners complied with
all applicable Section 16(a) filing requirements.
Proposals
of Shareholders for the 2010 Annual Meeting
Rule 14a-8
Pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended, some
shareholder proposals may be eligible for inclusion in our 2010
proxy statement. These shareholder proposals must be submitted,
along with proof of ownership of our stock in accordance with
Rule 14a-8(b)(2),
to our principal executive offices in care of our Corporate
Secretary. Failure to deliver a proposal by one of these means
may result in it not being deemed timely received. We must
receive all submissions no later than June 11, 2010.
Submitting a shareholder proposal does not guarantee that we
will include it in our proxy statement.
Advance
Notice Provision
Our Amended and Restated Bylaws also have an advance notice
procedure that shareholders must comply with to bring business
before an annual meeting of shareholders, including the
nomination of directors. The advance notice procedure requires
that a shareholder interested in presenting a proposal for
action at an annual meeting of shareholders must deliver a
written notice of the proposal, together with certain specified
information relating to such shareholders stock ownership,
identity and other matters, to our Corporate Secretary at least
120 days in advance of the date that our proxy statement
was released to shareholders in connection with the previous
year, or if no annual meeting was held, or if the date of the
annual meeting has changed by more than 30 days from the
date contemplated at the time of the previous years proxy
statement, the notice must be received not less than
120 days in advance of the first date that the solicitation
was made. We currently contemplate mailing our 2009 proxy
statement to our shareholders in early October 2009. Therefore,
proposals need to be submitted in accordance with the foregoing
by June 11, 2010.
Due to the complexity of the respective rights of the
shareholders and the company under
Rule 14a-8
and the advance notice provision, any shareholder desiring to
propose such an action is advised to consult with his or her
legal counsel with respect to such rights. We suggest that any
such proposal be submitted to us by certified mail, return
receipt requested.
Discretionary
Proxy Voting Authority/
Untimely Shareholder Proposals
Rule 14a-4
promulgated under the Securities and Exchange Act of 1934
governs our use of our discretionary proxy voting authority with
respect to a shareholder proposal that the shareholder has not
sought to include in our proxy statement. As set forth above,
shareholders must comply with the advance notice procedure in
our bylaws if they are to submit a proposal for consideration at
our annual meeting. We do not intend to entertain any proposals
or nominations at the annual meeting that do not meet the
requirements set forth in our bylaws. If the shareholder does
not also comply with the requirements of
Rule 14a-4(c)(2)
under the Securities Exchange Act of 1934, as amended, we may
exercise discretionary voting authority under proxies that we
solicit to vote in accordance with our best judgment on any such
shareholder proposal or nomination.
Shareholders
Sharing an Address
Shareholders sharing an address with another shareholder may
receive only one copy of our annual report and proxy materials
at that address unless they have provided contrary instructions.
Any such shareholder who wishes to receive a separate annual
report or set of proxy materials now or in the future may write
us to request a separate copy of these materials from Investor
Relations, G&K Services, Inc., 5995 Opus Parkway,
Minnetonka, MN 55343, or by calling Investor Relations, at
(952) 912-5500.
Any shareholders sharing an address with another shareholder can
request delivery of a single copy of annual reports or proxy
statements if they are receiving multiple copies of annual
reports or proxy statements by contacting us as set forth above.
Annual
Report on
Form 10-K
A copy of our
Form 10-K
for the fiscal year ended June 27, 2009, as filed with the
SEC, including the financial statements, schedules and list of
exhibits, and any exhibit specifically requested, will be
furnished without charge to any shareholder upon written
request. Please write or call our Director of Investor Relations
at the following address or telephone number: G&K Services,
Inc., 5995 Opus Parkway, Minnetonka, Minnesota 55343; phone
(952) 912-5500.
You may also access a copy of our
Form 10-K
on both our website at
http://www.gkservices.com
and the SECs website at
http://www.sec.gov.
Important
Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be Held on November 12,
2009
Our proxy statement and 2009 Annual Report are available at
www.gkservices.com.
28
Directions
to the Meeting
You may request directions to the annual meeting by writing or
calling our Director of Investor Relations at the following
address or telephone number: G&K Services, Inc., 5995 Opus
Parkway, Minnetonka, Minnesota 55343; phone
(952) 912-5500.
Solicitation
We will bear the cost of preparing, assembling and mailing the
proxy, proxy statement, annual report and other material which
may be sent to the shareholders in connection with this
solicitation. Brokerage houses and other custodians, nominees
and fiduciaries may be requested to forward soliciting material
to the beneficial owners of stock, in which case they will be
reimbursed by us for their expenses in doing so. Proxies are
being solicited primarily by mail, but, in addition our officers
and regular employees may solicit proxies personally, by
telephone, by special letter, or via the Internet.
Our Board of Directors does not intend to present to the meeting
any other matter not referred to above and does not presently
know of any matters that may be presented to the meeting by
others. However, if other matters come before the meeting, it is
the intent of the persons named in the enclosed proxy to vote
the proxy in accordance with their best judgment.
By Order of the Board of Directors
G&K Services, Inc.
Jeffrey L. Cotter
Vice President, General Counsel and Corporate Secretary
29
G&K SERVICES, INC.
5995 OPUS PARKWAY
MINNETONKA, MN 55343
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials,
you can consent to receiving all future proxy statements, proxy cards and annual
reports electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when prompted,
indicate that you agree to receive or access proxy materials electronically in future
years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your
proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have
provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M17442-P84831
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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G&K SERVICES, INC. |
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For |
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Withhold |
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For All |
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To withhold authority to vote for any individual |
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All |
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All |
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Except |
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nominee(s), mark For All Except and write the |
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number(s) of the nominee(s) on the line below. |
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU |
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VOTE FOR THE FOLLOWING: |
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o |
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o |
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o |
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Vote on Directors |
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1. |
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Proposal to elect four Class II directors for a term of |
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three years. |
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Nominees: |
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01) Paul Baszucki |
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02) Douglas A. Milroy |
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03) Alice M. Richter |
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04) Jeffrey L. Wright |
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Vote on Proposal |
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The Board of Directors recommends you vote FOR the following
proposal: |
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For |
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Against |
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Abstain |
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2. |
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Proposal to
ratify the appointment of Ernst & Young LLP, Independent
Registered Public Accounting Firm, as our independent auditors for fiscal 2010. |
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In their discretion, the proxies are authorized to vote on such other business as may properly come before the meeting or any
postponement or adjournment thereof. |
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(Shareholder must sign exactly as the name appears above.
When signed as a corporate officer, executor, administrator,
trustee, guardian, etc., please give full title as such. Both joint
tenants must sign.) |
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Shareholders to be held on November 12, 2009.
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
M17443-P84831
G&K SERVICES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
November 12, 2009
The undersigned, a shareholder of G&K Services, Inc., hereby appoints Douglas A. Milroy and
Jeffrey L. Cotter, and each of them, as proxies, with full power of substitution, to vote on
behalf of the undersigned the number of shares which the undersigned is then entitled to vote, at
the annual shareholders meeting of G&K Services, Inc. to be held at the Marquette Hotel,
710 Marquette Avenue, Universe Meeting Room, 50th Floor, IDS Building, Minneapolis, Minnesota,
55402, on Thursday, November 12, 2009, at 10:00 a.m. Central Standard Time, and at any and all
adjournments and postponements thereof, with all the powers which the undersigned would possess if
personally present.
The undersigned hereby revokes all previous proxies relating to the shares covered hereby and
acknowledges receipt of the Notice and Proxy Statement relating to the Annual Meeting of
Shareholders.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
When properly executed, this proxy will be voted on the proposals set forth herein
as directed by the shareholder, but if no direction is made in the space provided, this proxy
will be voted FOR the election of all nominees for director and FOR ratification of the
appointment of auditors and according to the discretion of the proxy holders on any other
matters that may properly come before the meeting or any postponement or adjournment thereof.
(Continued, and TO BE COMPLETED AND SIGNED, on the reverse
side)